NRF: Retail Sales Slow, But Fundamentals Remain Strong

Following strong retail sales gains through the first two months of 2023, consumers slowed their spending in March, but figures were still higher than March of a year ago, according to the National Retail Federation (NRF).

NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants – showed March was down 0.5% from February but up 4.6% unadjusted year-over-year. In February, sales were up 0.5%  and up 6.7% year-over-year. NRF’s numbers were up 6% unadjusted year-over-year on a three-month moving average as of March.

The U.S. Census Bureau said overall retail sales in March were down 1% from February but up 2.9% year-over-year. In February, sales were down 0.2% month-over-month but up 5.9% year-over-year.

“March spending reversed the strong pace of core retail sales we saw earlier this year,” said Jack Kleinhenz, chief economist with NRF. “These results reflect both slower economic activity and lower prices because of easing inflation – which means fewer dollars spent even if consumers buy the same number of goods – but there is still a lot of spending in the economy.”

Matthew Shay, president and CEO of NRF, added that the easing of inflation coupled with continued strength in the job market are keeping fundamentals of the economy strong. This, he said, should continue to support the consumer’s ability to spend on household priorities for the remainder of the year. 

“Retailers recognize the pressure on consumers from increased prices in services and experiences, and the impact of higher interest rates, and are prioritizing product mix, competitive pricing and convenience to help consumers stretch their budgets,” he said.

March sales were up in five out of nine retail categories on a yearly basis, led by online sales, health and personal care stores and grocery stores, but fell in all but three categories on a monthly basis. Specifics from key sectors include:

• Online and other non-store sales were up 1.9% seasonally adjusted and up 12.4% unadjusted year-over-year.
• Health and personal care stores were up 0.3% seasonally adjusted and up 7.3% unadjusted year-over-year.
• Grocery and beverage stores were down 0.1% seasonally adjusted but up 5.6% unadjusted year-over-year.
• Sporting goods stores were up 0.2% seasonally adjusted and up 3.3% unadjusted year-over-year.
• General merchandise stores were down 3% seasonally adjusted but up 2.9% unadjusted year-over-year.
• Furniture and home furnishings stores were down 1.2% seasonally adjusted and down 1.9% unadjusted year-over-year.
• Clothing and clothing accessory stores were down 1.7% seasonally adjusted and down 2.2% unadjusted year-over-year.
• Building materials and garden supply stores were down 2.1% seasonally adjusted and down 4.3% unadjusted year-over-year.
• Electronics and appliance stores were down 2.1% seasonally adjusted and down 9.9% unadjusted year-over-year.