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It Ain't Just Window Shopping! Stronger than Expected Retail Sales Data Suggests Economy's Strength

Apr 18, 2019

Better-than-expected US retail sales data released today suggests continued strength in the US economy, fending off forecasts for a soon-to-come economic downturn.
US retail sales surged in March by 1.6%, the largest increase in 18 months and largely beating economist consensus for a 1.0% increase.
As expected, US retail stocks reacted positively to the news with the S&P 500 Consumer Discretionary Index up 0.19% today. The S&P 500 Industrials Index, however, was the largest benefactor of the fresh US retail sales data, surging 1.04% intraday.
The growth in US March retail sales was driven by gains observed in motor vehicles and gasoline stations. In the month of March, US automobile dealer sales rose by 3.1%, the most in 18 months, while sales at filling-stations (gasoline stations) rose by 3.5%.
The sales growth in US automobile dealers and US gasoline stations explains why US industrials stocks are reacting so positively to the new data – among the three sub-sectors of the S&P 500 Industrials Index, the Transportation sector is up the most, appreciating 1.17% intraday.
Within the aggregate US retail sales data released today, the broad underlying March metrics also appear strong. Among the 13 US retail sub-categories, 12 observed growth in March.
Clothing stores in the US saw a 2% increase in total sales in March, the best growth since May 2018.
Food services sales increased 0.8% in March, the best gain for the metric since last July.
Nonstore retailer sales, meanwhile, increased 1.2% for the second straight month.
The US Labor Department also released positive initial jobless claims data today alongside US retail sales. Last week, US initial jobless claims fell to 192,000, the lowest number of claims since September 1969, further supporting the current strength of the US economy.

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