**MNI 5 Things: February Retail Sales Post Surprise Drop>

--5 Things We Learned From The February Retail Sales Data

By Kevin Kastner, Sara Haire and Holly Stokes

     WASHINGTON (MNI) - The following are the key points from the 

February retail sales report from the Commerce Department released 

Wednesday:               

     - February retail sales were surprisingly weak, falling by 0.1%, 

well below the 0.4% gain expected by analysts and the 0.2% gain expected 

by the whisper number. Motor vehicle sales declined in the month and 

sales outside of motor vehicles were softer than expected. The data 

point to a very soft PCE number for the first quarter. 

     - Even excluding a 0.9% decline in motor vehicle sales, retail 

sales ex auto were up only 0.2%, much weaker than the 0.5% rise 

expected. Analysts have a tendency to underestimate February retail 

sales, especially excluding motor vehicles, so the data today deviate 

from that trend. However, an MNI data preview showed multiple risks to 

the forecast this month. January headline sales were revised higher to a 

0.1% decline and are now up 0.1% ex motor vehicle. December sales, 

however, were revised lower. 

     - February sales rose 0.3% ex. motor vehicle and gas, and were up 

0.1% ex auto, building materials, gas and food services, stronger than 

the headline figure but still suggesting underlying weakness for both 

the month and the quarter. 

     - Gas station sales fell 1.2% (retail sales ex. gas flat), but 

building materials rebounded by 1.9% and food services sales were up 

0.2%. The other categories were mixed, with gains in clothing, sporting 

goods, and nonstore retailers offsetting declines in furniture, 

electronics, and at department stores. 

     - February total sales were up only 0.3% for 1Q vs 4Q average at an 

annual rate and were up 2.2% ex motor vehicles and up 1.0% ex autos, 

building materials, gas, and food services, suggesting a soft reading 

for 1Q PCE. 

     ** MNI Washington Bureau: 202-371-2121 ** 

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