WASHINGTON — Despite a slowdown in the pace of growth in consumer spending in February, specialty chains posted sales gains, while department stores and discounters registered declines, the U.S. Commerce Department’s monthly report revealed on Tuesday.
Apparel and accessories stores posted a seasonally adjusted increase of 0.9 percent in sales to $21.5 billion last month, while sales at general merchandise stores, a category that includes discounters and department stores, fell 0.2 percent to $56.2 billion and department store sales fell 0.4 percent to $13.4 billion last month.
“While spending moderately, consumers are navigating through the heavy fog of market turbulence experienced earlier this year,” said Jack Kleinhenz, chief economist at the National Retail Federation. “Looking at the bottom line, consumer spending is on track to rise, which is good news for the economy.”
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Scott Hoyt, senior director of economics at Moody’s Analytics, also noted that real spending growth has slowed, but said Moody’s expects spending to pick up and has already starting seeing “an improvement” in wage growth.
“As the labor market continues to tighten, we should see more and more of that wage growth, which will be supportive of consumer spending,” Hoyt said.
But he said retailers are also facing a long-term pattern of price deflation, which is “making it difficult for them to generate sales gains.”
“One of the big stories in the retail space has been the lack of pricing power,” Hoyt said. “The rising value of the dollar has put downward pressures on import prices and costs,” he noted, adding the he expects that trend to continue.
In the overall economy, February retail sales fell 0.1 percent to $447.3 billion from the previous month, in line with economists’ expectations.
“In February, retail sales were weak with very few gainers,” said Chris G. Christopher Jr., director of consumer economics at IHS Global Insight. “The unseasonably warm February weather assisted in boosting building material and garden supply, sporting goods, and clothing store sales.”
But motor vehicles and parts dealers, furniture, electronics, grocery, gasoline, general merchandise, department stores, and nonstore retailers were “all in negative territory in February,” he noted.
“Originally, we thought consumers came out like gangbusters in January, however the downward revisions [by the government] to January make it evident that consumers have been cautious the past three months,” Christopher said. “We expect retail sales, consumer spending, and consumer confidence to pick up in March, since stock market volatility has been relatively subdued.”