Overall US retail sales in February were up 0.3% seasonally adjusted from January and up 17.6% year-over-year, according to US Census Bureau data. That built on a monthly increase of 4.9% in January over December – more than a percentage point higher than the original estimate of 3.8% – and January’s 14% increase year-over-year.
Despite occasional month-over-month declines, sales have grown year-over-year every month since June 2020, according to Census data.
Sales at clothing and clothing accessories stores were up 1.1% month-on-month and by 30.6% compared to the same period a year ago.
National Retail Federation (NRF) president and CEO Matthew Shay notes retail sales data continues to show impressive consumer resilience.
“Despite all that’s been thrown at them including inflation, supply chain constraints, market volatility and significant geopolitical events, consumers remain able and willing to spend,” he says. “Retailers are nimble and are dedicated to serving their customers with great experiences, great products and services at the best possible prices they can. Our outlook remains constructive, with solid retail sales growth for all of 2022 increasing by 6-8%. Consumer financial health can continue if current pressures in the economy are moderated by sound policy decisions that do not compound the challenges our economy is already facing.”
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NRF chief economist Jack Kleinhenz adds: “February retail sales reflected continued strong labour market conditions but were certainly affected by higher consumer prices. With the highest levels in 40 years, there is no doubt continued increases in inflation are hitting household purchasing power and likely restraining spending.
“We shouldn’t be surprised by the slower pace of sales given that purchases had surged in January and the upward revisions made to those numbers. And the double-digit year-over-year increase was expected given that much of the economy was still in stay-at-home mode a year earlier. February’s sales are another sign of the economy’s resilience, but the conflict in Europe is an increasing headwind that could dampen spending around the globe.”
NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants to focus on core retail – showed February was down 1% seasonally adjusted from January’s revised numbers but up 13% unadjusted year-over-year. In January, sales were up 5.9% month-over-month and up 9.6% year-over-year.
NRF’s numbers were up 11.8% unadjusted year-over-year on a three-month moving average as of February.
Under the same calculation, NRF forecast this week that 2022 retail sales will increase between 6-8% to total between US$4.86tn and $4.95tn.
February sales were down in two-thirds of categories on a monthly basis but up across the board on a yearly basis, with year-over-year gains led by clothing and online sales.
Online and other non-store sales were down 3.7% month-over-month seasonally adjusted but up 13.9% unadjusted year-over-year.
Clothing continues to perform well in February
Neil Saunders, managing director of GlobalData, notes against a backdrop of rising inflation and the early stages of international turmoil, consumers were resilient in February – spending 17.7% more on retail than they did in the prior year and 20.3% more than they did in February of 2020.
“In cash terms, these increases represent uplifts of $86.7bn and $97.5bn, respectively. The growth rate accelerated compared to January, although much of this is because there was a much softer prior year comparative which flatters the figures.
“Retail sales are not adjusted for inflation so include the impact of price rises, which we estimate to have attributed around 8.9 percentage points of total growth. When this is factored in, the expansion is not quite as robust as it first appears and is much reduced on the punchy numbers being produced throughout 2021.
“Despite the pressures in some categories, there was some volume or real-terms growth overall. However, the problem is that as households get more and more squeezed on essentials, there is less budget available for discretionary spending. True, there is an elevated buffer of savings which consumers can call upon to fund their consumption, but this is a short-term fix in an environment where inflation is becoming a persistent problem. The danger is that as we progress through this year, inflation will make up an ever-increasing proportion of growth leaving underlying volumes squeezed.
“Such a situation is dangerous for retailers as it essentially means consumers will consolidate their spending and spread it among fewer players. This would be a marked contrast to the past couple of years where a rising tide of buying activity has helped to float all retail boats. In essence, by the end of this year we could well find ourselves back in a situation of very polarised retail performance where there is a clear demarcation between winners and losers.
“On a sector basis, apparel continues to perform well with a 31% increase in sales over the prior year. Continued interest in fashions for socialising, vacations, and refreshing closets is still in play and is fuelling consumer activity. However, we have also detected some trading down with more shoppers turning to off-price, resale and value players for some of their purchases. This is likely in response to squeezed budgets.
“Overall, at both an overall and a category level, the current picture is far from gloomy. Indeed, the drop in consumer sentiment which has been widely reported is disconnected with the way in which consumers are behaving. However, we remain cautious. As we move into March, retail comes up against some very tough prior year comparatives. The economic situation as deteriorated, as has the general mood of the country due to international challenges. All these things will take their toll. We don’t expect retail to implode, but we do anticipate it is now on a downward glidepath.”
