U.S. retail sales in February posted the smallest gain in six months, indicating a tempering of the consumer spending that’s been carrying the economy.
Purchases rose 0.1%, matching the Bloomberg News survey median estimate, after a 0.6% increase in the prior month that was stronger than previously reported, Commerce Department figures showed March 15. Just four of the 13 major retail categories saw gains in February sales.
Receipts dropped at electronics and appliances stores, apparel outlets and car dealers, a sign of more moderate consumption in the first quarter. While purchases may have been restrained by a temporary slowdown in individual tax refunds, robust confidence, healthy job growth and steady incomes may provide some fuel for a recovery in spending.
February was “relatively weak, and one of the reasons is the delay of tax refunds,” Eugenio Aleman, senior economist at Wells Fargo Securities in Charlotte, North Carolina, said before the report. Still, “confidence numbers are through the roof and, if employment continues to grow, it’s only going to strengthen the consumer.”
Estimates for retail sales in the Bloomberg survey ranged from a 0.3% decrease to a 0.5% advance. The January reading was previously reported as a 0.4% rise.
The figures used to calculate gross domestic product, which exclude categories such as food services, auto dealers, home-improvement stores and service stations, rose 0.1%. That followed the prior month’s 0.8% increase in the so-called retail control group.
A separate report March 15 from the Labor Department showed inflation is slowly emerging. The consumer-price index rose 0.1% after a 0.6% jump in January. Compared with a year earlier, the CPI was up 2.7%, the most since March 2012.
The pickup in price pressures at the start of the year led to the biggest drop in inflation-adjusted spending since 2009, according to separate Commerce Department data earlier in March.
Part of the reason for the weaker retail sales figures, which aren’t adjusted for changes in prices, may be due to a change in the law that affects tax refunds. The Internal Revenue Service said that some filers wouldn’t receive refunds until the last week of February.
About $127 billion in refunds were processed this year through the week ended Feb. 24, about 10.5% less than in the same period in 2016.
The Commerce Department’s report also showed retail sales excluding automobiles and service stations increased 0.2%.
Industry data earlier in March showed car sales in February were little changed from a month earlier. Cars and light trucks sold at an annualized 17.5 million pace, based on Ward’s Automotive data.
Sales at stores that sell electronics and appliances slumped 2.8%, the most since December 2011. Receipts at gasoline stations fell 0.6%, while sales dropped 0.5% at clothing chains and 0.2% at general merchandise stores.
Internet-based purchases rose, while sales of furniture, personal-care products and building materials also increased.