Announced this morning, Retail Sales increased 1.4% in March, as expected and a rebound from the flat reading the previous month. The Control Group, which is a closer measure of the inputs for GDP that excludes sales for food, autos, building materials, and gas stations, increased 0.4% in March, less than expected and below the previous month’s revised increase.
Reviewing the various categories, monthly sales for Autos and Other Motor Vehicle Dealers, up 5.7%, and Building Materials & Garden Equipment, up 3.3%, were both relatively strong while monthly sales at Gasoline Stations, down -2.5%, and Furniture & Home Furnishings, down -0.7%, were relatively weak.
Overall, headline retail sales increased as expected in March and were nicely above last month’s figure. Individuals purchased autos and building materials, including garden equipment. The control group was less than expected and less than in the previous month, highlighting the weak consumer sentiment data seen in previous weeks.
It is nice to see that consumers were spending just before the tariffs were officially announced earlier this month, although it is likely that some of the spending could be individuals trying to get ahead of the announcement. With the uncertain outcome and timing of tariff negotiations with various countries, the willingness of consumers to remain active in this environment will be a key factor for the economy, markets, and Fed policy in the coming weeks.
In all, the 10-year US treasury yield initially ticks slightly higher following the report and equity futures are lower as we head into the market open.
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