US retail sales down 0.2% in February in mixed economic data

US retail sales fell in February by 0.2%, below the 0.3% rise expected from economists. However, the manufacturing index improved to 55.8%, according to statistics from the US Commerce Department.

Why did US retail sales fall in February?

US retail sales declined after weak sales in January. The decline in sales is likely because of the effects of the US government shutdown. Because of the shutdown affecting the Internal Revenue Service (IRS), taxpayer refunds were issued later than usual. As a result, Americans cut back on purchases of cars, clothes, and even food. National Retail Federation ( NRF) Economist, Jack Kleinhenz, also noted that the harsh winter and Wall Street volatility also affected US retail sales in February.

‘The weaker-than-expected February retail sales numbers reflect colder weather and increased precipitation that kept shoppers home but were also skewed downward because of the government's upward revision in January's results,’ said Kleinhenz.

‘The after-effects of the erratic stock market, the government shutdown, and slower tax refunds this year also likely played a role. It is important to look beyond the February figures and focus on the very significant revision to January retail sales, which shows that the consumer has not forsaken the economy as some previously claimed,’ added Kleinhenz.

Manufacturing index improves in February

While retail news was disappointing, there was slightly better news for US manufacturing. The US manufacturing index rose one point to 55.8% as new orders grew in February. Economist, Richard Moody, said the manufacturing data shows that the US economy may not be completely slowing down yet.

‘There is nothing in the details of the data or the comments to make you think the expansion is going to come to an end anytime soon,’ said Moody.