The Positive Side Of Today's Retail Sales Data Point

Retail sales were much weaker "than expected" in March, but upward revisions to January and February reduce somewhat the importance of the decline, both because of the netting of the figures and because the revision pattern could be tilting up instead of down.

Some observers are apt to note that price declines may have been responsible for at least some of the decline in March retail sales. This means that the volume of goods sold was better than implied by the sales figures, which are released without any adjustment for prices. Today's data indicate that the first-quarter average is below the fourth-quarter average, pointing to a decrease in the consumer spending portion of the first quarter's gross domestic product.

As reported, retail sales fell 1.1% in March, a whopping 1.4 percentage points below the consensus forecast. Revisions to past months were up five-tenths of a percentage point, reducing the sting a bit. Excluding automobiles, retail sales fell 0.9%; expectations were for an unchanged reading. Revisions to this group were up three-tenths of a percentage point. Gasoline sales reduced the ex-auto tally by a tenth of a percentage point.

As implied by the two missed forecasts, a key reason for the large forecast miss on overall sales was automobile sales. There was a sequential increase reported in unit sales, but statisticians use special adjustment factors, altering the raw data and in this case rendering a decline of 2.3% for March.

A notion that some are likely to offer for the weakness is the recent liquidation of major retailers, a process that results not only in lower prices but also in the sale of goods at locations not included in the retail sales survey. In other cases, inconveniences caused by the closing of stores could delay the sale of goods to consumers recalibrating their shopping routine.

Whatever the cause, the idea of stabilization holds up. Retail sales for the quarter were up a cumulative 1.1% overall and 1.9% ex-autos.

That's far better than in the fourth quarter, when retail sales fell 8.9% overall and 8.7% ex-autos. Reinforcing the stabilization idea are the past three weeks of chain-store sales figures, which were the best of any three-week period since December 2007. Excepting that period, the three-week period is the best since December 2006.