Core retail sales inch up in February but show some signs of cooling

After an unexpectedly strong January, overall retail sales dipped slightly in February, but core spending rose amid a still-tight labor market.

Core retail sales in February were up 0.5% from January and up 6.5% year over year, according to the National Retail Federation. (NRF’s calculation of retail sales excludes automobile dealers, gasoline stations and restaurants to focus on core retail.)

The U.S. Census Bureau reported that overall retail sales in February were down 0.4% from January but up 5.4% year over year. Sales at restaurants were down 2.2% month over month in February, while auto sales fell 1.8%.

Core sales in February increased in five out of nine categories on a monthly basis, and were up in all but one retail category (electronics and appliance stores) on a yearly basis, led by general merchandise stores, online sales and health and personal care stores.

Sales growth has slowed in recent months, but consumers’ economic health still looks good, said NRF chief economist Jack Kleinhenz, who noted that February is typically the slowest month of the year.

“Sales are higher than last year and that’s due in large part to the strong labor market, which means more income and spending,” he added. “We are seeing a decent trend for retail sales growth built on the upward revisions to December and January sales.”

Kleinhenz advised, however, that seasonal adjustment factors the government is applying to the monthly data to account for irregular post-pandemic spending patterns make it difficult to accurately measure the strength of the consumer.

Specifics from key sectors for February sales are below.  

• General merchandise stores were up 0.5%. month over month and up 10.7% year over year.
• Online and other non-store sales were up 1.6% month over month and up 8.5% year over year.
• Health and personal care stores were up 0.9% month over month and up 8% year over year.
• Grocery and beverage stores were up 0.5% month over month and up 5.5% year over year.
• Clothing and clothing accessory stores were down 0.8% month over month but up 4.1% year over year.
• Sporting goods stores were down 0.5% month over month but up 3.4% year over year.
• Building materials and garden supply stores were down 0.1% month over month but up 0.7% year over year.
• Furniture and home furnishings stores were down 2.5% month over but up 0.4% unadjusted year over year.
• Electronics and appliance stores were up 0.3% month over month but down 2.2% year over year.