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Nominal retail sales for March beat expectations with a gain of 0.6 percent for the month, with the help of strong auto sales.

March '18 Retail Sales, February Inventories, April Builder Confidence

April 16, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

Positives for 2018Q1 GDP

  • Retail Sales increased by 0.6 percent in March, beating expectations.
  • Manufacturing and Trade Inventories expanded by 0.6 percent in February.
  • The National Association of Homebuilders’ Housing Market Index decreased in early April.


Retail sales and inventory data points released this morning are supportive of first quarter GDP growth. Nominal retail sales for March beat expectations with a gain of 0.6 percent for the month, with the help of strong auto sales. Auto sales ramped up to a 17.5 million unit rate in March. The dollar value of retail sales of autos increased by 2.0 percent in March. Non-auto retail sales increased by 0.2 percent, supported by a 1.4 percent increase in the sales of personal and healthcare stores. Other categories were mixed.

Manufacturing and trade nominal inventories also increased by 0.6 percent in February, after a similar 0.6 percent increase in January. Over the 12 months ending in February, manufacturing and trade inventories were up by 4.0 percent. The total inventory/sales ratio trended down through 2016 and 2017, after increasing from 2012 through 2016. This January and February, the ratio climbed again. If the inventory/sales ratio keeps climbing through this year, that would be a warning flag for the health of the economy.

According to the National Association of Home Builders, their housing market index dipped to 69 in April, from 70 in March. The index was up to 74 in December, its highest level since 1999. Weather has been a challenge for both builders and buyers this spring. Also, gradually increasing mortgage rates may be a headwind for some buyers.
Market Reaction: Equity markets opened with gains. The 10-year Treasury yield is up to 2.85 percent. NYMEX crude oil is down to $66.38/barrel. Natural gas futures are up to $2.80/mmbtu.

For a PDF version of this report click here: Retail-Sales-04162018.

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