March retail sales, February’s business inventories, etal

Major monthly reports released last week were the Retail Sales report for March and the associated Business Sales and Inventories report for February, both from the Census Bureau, and the Regional and State Employment and Unemployment Report for February from the Bureau of Labor Statistics, a report which breaks down the two employment surveys from the monthly national jobs report by state and region …while the text of that report provides a useful summary of the state and regional data, the serious statistical aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands..

Also released last week was the Chicago Fed National Activity Index (CFNAI) for March, a weighted composite index of 85 different economic metrics, which decreased to –0.20 in March from +0.03 in February, after February’s index was revised up from the –0.11 reported in last month’s report…as a result, the more often cited 3 month average of that index decreased to –0.03 in March from +0.03 in February, which would indicate that national economic activity has been close to the historical trend over recent months, which is what would indicated by a reading of zero…

This week also saw the release of another regional Fed manufacturing survey for April: the Kansas City Fed manufacturing survey for April, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index ​slipped to +10 in April, down from +11 in March but up from +5 in February, indicating that a modest plurality of that region’s manufacturers continued to see improving conditions for the third straight month, after index readings of zero in December and January…

Retail Sales Rose 1.7% in March After Prior Two Months’ Sales Revised Higher

Seasonally adjusted retail sales increased by 1.4% in March, after retail sales for January and February were revised higher…the Advance Retail Sales Report for March (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $752.1 billion during the month, which was up by 1.7 percent (±0.4%) from February’s revised sales of $739.8 billion, and 4.0 percent (±0.5 percent) above the adjusted sales in March of last year… February’s seasonally adjusted sales were revised from $738.4 billion to $739.8 billion, while January’s sales were revised from $734.0 billion to $734.5 billion; as a result, the percent change from January to February was revised from up 0.6 percent (±0.4 percent) to up 0.7 percent (±0.2 percent)….estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually rose almost 16.0%, from $655,064 million in February to $759,588 million in March, while they were up 4.5% from the $726,888  million of sales in March of a year ago…

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the March Census Marts pdf….the first double column of this table shows us the seasonally adjusted percentage change in sales for each kind of business from the February revised figure to this month’s March “advance” report in the first sub-column, and then the year over year percentage sales change since last March in the 2nd column; the second double column pair below gives us the revision of last month’s February advance estimates (now called “preliminary”) as of this report, with the new January to February percentage change under “Jan 2026 r” (revised) and the February 2025 to February 2026 percentage change as revised in the 2nd column of that pair…(for your reference, our copy of this same table from the advance February estimate, before this month’s revisions, is here)…. lastly, the third pair of columns shows the percentage change of the first 3 months of this year’s sales (January, February and March) from the preceding three months of the 4th quarter (October thru December 2025) and from the same three months of the 1st quarter of a year ago….as you can see from that fifth column, overall retail sales for the 1st quarter of 2023 were 1.2% higher than the 4th quarter of 2025, which implies that nominal personal consumption of goods for the 1st quarter will be up by roughly the same amount, before any inflation adjustments…

To compute March’s real personal consumption of goods data for national accounts from this March retail sales report, the BEA will initially use the corresponding price changes from the March consumer price index, which we reviewed two weeks ago… to estimate what they will find, we’ll first separate out the volatile sales of gasoline from the other totals…from the third line on the above table, we can see that March retail sales excluding the 15.5% price-related increase in sales at gas stations were up by 0.6%….then, by subtracting the dollar values representing the 0.7% increase in grocery & beverage sales and the 0.1% increase in food services sales from that total, we find that core retail sales were up by almost 0.7% for the month…since the March CPI report showed that the the composite price index of all goods less food and energy goods was 0.1% higher in March, we can thus estimate that real retail sales excluding food and energy will have increased around 0.6%…however, the actual adjustment in national accounts for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at clothing stores were unchanged in March, the apparel price index was 1.0% higher, which suggests that real sales of clothing were actually 1.0% lower, since dollars spent at those stores were buying 1.0% less clothing… similarly, while sales at health and personal care stores were 0.5% higher, the price index for medical care commodities was 1.0% lower, which suggests real sales of drugs and health products were actually up by around 1.5%….

In addition to figuring those core retail sales, we should also adjust food and energy retail sales for their price changes separately, just as the BEA will do…the March CPI report showed that the food price index was unchanged in March, as the price index for food purchased for use at home was 0.2% lower, while the index for food bought away from home was 0.2% higher, as prices at fast food outlets rose 0.2% while prices at full service restaurants rose 0.3%…hence, with the 0.7% increase in average prices at food and beverage stores, the change in real sales of food and beverages would be 0.2% higher than their nominal sales change, or up by around 0.9%…meanwhile, the 0.1% increase in nominal sales at bars and restaurants, once adjusted for 0.2% higher prices, suggests that real sales at bars and restaurants fell by around 0.1% during the month…and while sales at gas stations were up 15.5%, there was a 21.2% increase in the price of gasoline during the month, which would suggest that real sales of gasoline were down by about 4.7%, with a caveat that gasoline stations do sell more than gasoline, products which should not be adjusted with gasoline prices…reweighing and averaging the real sales changes that we have thus estimated back together, and excluding food services, we can then estimate that the income and outlays report for March will show that real personal consumption of goods rose by more than 0.2% in March, after rising by a revised 0.3% in February and by a revised 0.1% in January…at the same time, the 0.1% decrease in real sales at bars and restaurants probably not be significant enough to statistically lower March real personal consumption of services…(note: we have little confidence in that PCE goods estimate because of the aberrant gasoline adjustment; without gasoline, our estimate would show that real PCE goods were 0.7% higher..)

February Business Sales Rose 1.7%, Business Inventories Rose 0.4%

After the release of the March retail sales report, the Census Bureau also released the composite Manufacturing and Trade, Inventories and Sales report for February (pdf), which incorporates the revised February retail data from that March retail report and the earlier published February wholesale and factory data to give us a complete picture of the business contribution to the economy for that month…. According to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $2,014.8 billion, up 1.7% (±0.2 percent) from January, and up 5.5 percent (±0.5 percent) from sales of February last year…January’s sales were revised from the originally reported $1,974.6 billion to $1,981.2 billion, now a 0.6% increase from December, vs the 0.3% increase previously reported….the seasonally adjusted value of manufacturer’s sales rose 1.4% to $623,243 million in February; retail trade sales, which exclude restaurant & bar sales from the revised February retail sales reported earlier, were 0.7% higher at $639,691 million, while wholesale sales rose 2.7% to $751,874 million…

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,686.8 billion at the end of February, up 0.4 percent (±0.1%) from the end of January, and 1.3 percent (±0.4 percent) higher than in February a year earlier…at the same time, the value of end of January inventories was revised from the $2,675.0 billion reported last month to $2,676.9 billion, now shown as unchanged from December, rather than down 0.1% ….seasonally adjusted inventories of manufacturers were estimated to be valued at $950,492 million, up 0.1% from January, while inventories of retailers were valued at $816,723 million, 0.2% higher than January, and inventories of wholesalers were estimated to be valued at $919,577 million at the end of February, 0.8% higher than in January…

For GDP purposes, all those inventories, including retail, are adjusted for inflation with appropriate component price indices of the producer price index for February, which was up by 1.0% for finished goods…two weeks ago, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged that the modest inflation adjusted decrease in real factory inventories was less than the 4th quarter decrease, would thus add to first quarter GDP an amount equal to the difference between the quarterly decreases….that same week, we judged that January’s and February’s real decreases in wholesale inventories would subtract that 4th quarter increase, plus the first quarter decrease, from the growth rate of 1st quarter GDP…Since the nominal value of retail inventories for February has now been shown to be 0.1% higher, real retail inventories for the month, after the 1.0% finished goods price adjustment, thus would have thus decreased by 0.9% from January, after a 0.5% increase in that month…since the fourth quarter saw real retail inventories down slightly, whether 1st quarter inventories. also down slightly​, add or subtract from 1st quarter GDP will be determined by which quarter’s real retail inventory decrease is greater​ after we get the March data..

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are chosen from the aforementioned GGO posts, contact me…)