Economy Watch: Retail Sales Spike Unexpectedly
- Apr 17, 2012
The Census Bureau reported on Monday that retail sales jumped 0.8 percent month-over-month in March—higher than expected—as Americans spend more across the board on goods and services. The increase came in spite of, and not because of, the rising price of gas last month (which was decelerating in any case), and followed an increase of 1 percent in February and a year-over-year increase of 6.5 percent.
Car sales continue to be brisk, up 0.9 percent for the month. Take away auto sales, however, and retail sales were still up 0.8 percent in February; take away gas and autos, and retail sales were up 0.7 percent. People bought more stuff of various kinds: clothes, garden equipment, electronics, building materials and more. They went to bars and restaurants a bit more often and spent a bit more money there.
Separately, the Commerce Department reported that businesses were busy buying in March as well, restocking inventories. That points to optimism among businesses that consumers will, at least in the near term, keep buying more stuff, a trend that seems to be borne out by March’s retail numbers.
Homebuilder confidence slips
Homebuilders weren’t quite as chipper in March as in recent months, according to the National Association of Home Builders on Monday, with its Housing Market Index dropping three points to 25. That was the first decline for the index in seven months, though homebuilders haven’t experienced genuine optimism (a reading over 50) since before the housing bubble burst, merely greater or lesser degrees of melancholy over the state of the market.
Each of the index’s components registered declines in April. The component gauging current sales conditions and the component tracking sales expectations in the next six months each fell three points, to 26 and 32, respectively. The traffic of prospective buyers component fell four points to 18.
“What we’re seeing is essentially a pause in what had been a fairly rapid build-up in builder confidence that started last September,” said NAHB chief economist David Crowe. “This is partly because interest expressed by buyers in the past few months has yet to translate into expected sales activity, but is also reflective of the ongoing challenges that are slowing the housing recovery.”
Remodeling activity up
A lesser-known housing-industry index, the BuildFax Remodeling Index, was up 3 percent in February compared with the month before, and up 23 percent year-over-year during February. About 2.89 million construction permits for residential remodeling were filed with local building departments nationwide during the month, according to BuildFax on Monday. The company specializes in tracking property histories (like CarFax tracks auto histories).
Remodeling tends to follow the health of the economy, though not necessarily the health of the housing market. Remodeling activity is currently lower than the peaks of the mid-2000s housing boom, but up about 25 percent from the most recent trough in May 2009.
Though cheered somewhat by the retail numbers, Wall Street gyrated a bit on Monday, and ended the day mixed. The Dow Jones Industrial Average was up 71.82 points, or 0.56 percent. The S&P 500 barely moved, losing 0.05 percent, while the Nasdaq was down 0.76 percent.