In March, US retail sales surprised on the downside of expectations. On a monthly basis, retail sales dropped by 1.1% M/M, while an increase by 0.3% M/M was expected. The previous figure was upwardly revised from -0.1% M/M to 0.3% M/M. Looking at the details, only sales of food & beverages and health care were rising, indicating that weakness was broadly based. The weaker than expected outcome was led by a 5.9% M/M decline in sales of electronics and a 2.3% M/M decline in motor vehicles & parts sales. The less volatile retail sales less autos dropped by 0.9% M/M. This unexpected decline is a bit disappointing after retail sales showed a rebound in January and February, but the data might be distorted due to the late Easter compared to last year.
Producer prices dropped by 1.2% M/M in March, while the consensus was looking for a flat outcome. The unexpected decline was due to a 13.1% M/M decline in gasoline, but also food (-0.7% M/M) prices dropped further, partially due to seasonal adjustment, which deepened the drop, the BLS added. Excluding food and energy, PPI came out flat while a marginal increase was forecasted. The unexpected drop raises expectations that also consumer prices, released today, might come out lower than expected.
US business inventories showed the sixth consecutive decline in February. Business inventories dropped by 1.3% M/M, while sales rose by 0.2% M/M. The inventory/ sales ratio dropped marginally from 1.45 to 1.43. In the coming months, it might be interesting to keep an eye on the inventory/sales ratio as a significant decline in this ratio might be an indication that producers should increase production.
