In this morning’s data, Retail Sales increased by 1.7% in March, higher than expected and more than double the revised increase in 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 0.7% in March, also higher than expected and slightly more than the previous month’s revised increase.
Reviewing the various categories, monthly sales for Gasoline Stations, up 15.5%, Department Stores, up 4.2%, and Furniture & Home Furnishings, up 2.2%, were all relatively strong, while monthly sales at Miscellaneous Store Retailers, down -0.9%, were relatively weak.
Overall, retail sales increased more than expected in March for both the headline and the control group. Sales for gasoline stations were a primary factor, given the increase in oil prices from the limited flow of oil-carrying ships through the Strait of Hormuz as the Iran conflict continues. In addition, monthly sales at department stores and furniture stores were also strong, but were offset somewhat by sales at miscellaneous store retailers.
Consumers appear resilient in the current environment, which has been a common phrase from company commentaries for those who have reported at the start of this earnings season. While some of the benefits from higher tax refunds are going towards higher gasoline prices, spending has continued in other categories as well. Even though consumer sentiment measures have been very low in recent reports, people are still spending money. As long as consumers continue to spend and the labor market stays stable, the economy should remain intact. Amidst this backdrop, earnings results and management commentaries will be a key focus for the markets in the weeks ahead.
In all, the 10-year US treasury yield is ticking higher this morning, and equity markets are slightly lower in today’s trading.
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