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US Core Retail Sales Reverse 3-Month Trend

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U.S. Census Bureau releases advance March retail sales

Core US retail (XRT) (RTH) (XLY) sales were up in March 2015. Core retail sales rose 0.3% month-over-month and 2.4% year-over-year to $242.2 billion on a seasonally-adjusted basis. Core retail sales exclude categories such as restaurants, auto and motor vehicle parts sales, as well as the more volatile categories of building supplies and gasoline.

The gain in core retail sales reversed three consecutive months of declines. Core retail sales last posted a gain of 0.6% in November 2014. An early Easter and improving weather precipitated the rebound. Last year, Easter fell in mid-April compared to early April this year. This benefited year-over-year comparisons in March 2015. However, an early Easter didn’t benefit all retailers, as you’ll discover in Part 4 of this series.

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Retail sales ex-auto, ex-gas

Retail sales, excluding motor vehicles and parts sales as well as gasoline, rose by 0.5% month-over-month and 3.6% year-over-year to $314 billion on a seasonally-adjusted basis. This metric reversed two months of declines, allowing for the first gains since December 2014 to be posted. Consensus estimates had projected an increase of 0.4%.

Non-core category growth

Core retail sales growth trailed total US retail sales growth, however. Total retail sales posted a monthly increase of 0.9% in March 2015. Non-core categories—auto sales and motor vehicle parts sales, restaurants and building supplies—all posted above-average growth. This was tempered somewhat by significantly lower gasoline sales.

The higher growth in non-core categories resulted in higher prices for certain stocks. McDonald’s (MCD) and General Motors (GM) stocks rose by 0.1% and 0.2%, respectively, on April 14. Building supply companies Armstrong World Industries (AWI) and USG (USG) stocks were up by 1.3% and 0.4%, respectively, on April 14.

MCD reported a 4% decline in US same-store sales in February. A higher growth rate for restaurant sales in March proved slightly bullish for the company. GM reported strong sales in March for certain vehicle models. MCD and GM together constitute 6.3% of the Consumer Discretionary Select Sector SPDR Fund (XLY).

The next article in this series discusses category gains in more detail.

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