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Retail sales rebounded in February after suffering the steepest decline in almost a year last month.
Retail sales rose 0.6% in February from the previous month, according to Census Bureau data. Economists had expected spending to rise 0.8%, according to Bloomberg data. Retail sales had previously fallen by an unexpected 1.1% in January.
“The modest recovery in retail sales in February suggests that consumer spending growth has slowed in early 2024,” said Michael Pearce, deputy chief U.S. economist at Oxford Economics.
Sales excluding cars and gasoline rose 0.3% in February, in line with expectations.
By category, construction materials and gardening equipment led the rise, rising 2.2%. Sales at automobile and parts stores increased by 1.6%, and at electrical and home appliance retailers by 1.5%.
The consumer restraints come as the economy remains on largely solid footing heading into the start of 2024. Consensus forecasts for economic growth in the first quarter have been revised upwards, while the labor market continues to add more jobs than previously expected.
This economic strength comes as recent inflation figures show that price increases are not easing as quickly as initially expected. The combination of stronger-than-expected inflation and a still-growing economy has economists believing the Federal Reserve can wait longer to cut interest rates without pushing the economy into recession.
“This month’s retail sales report confirms our view that the economy is strong but cooling,” Ellen Zentner, chief U.S. economist at Morgan Stanley, said in a note to clients. “There is no reason for the Fed to rush the next rate hike. If there is enough data to give the Fed confidence that inflation is on a sustained path toward its 2% target, the Fed will first raise funds in June. We expect them to lower interest rates.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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