–Food Store Sales Jump 25.6%, Most Other Categories Fall Sharply
–Empire State Index Drops to -78.2 in April from -21.5 in March
–Industrial Production Falls 5.4%, Manufacturing Down 6.3%, Lows Since 1946
By Kevin Kastner
WASHINGTON (MaceNews) – As U.S. consumers heeded government warnings to remain home to mitigate the spread of COVID-19, and most business were told to shut their doors, retail sales plunged in March.
At the same time, industrial production posted its largest monthly decline in 64 years, and the N.Y. Fed’s Empire State index tumbled in the national hot spot for the COVID-19 cases.
Total retail sales fell by 8.7% in the month, below even the pessimistic 7.0% decline expected, with sharp declines seen in virtually every sales sector. Motor vehicle sales alone fell by 25.6%.
The notable exception was a 25.6% jump in food store sales – not surprising as the fear of being locked into their homes pushed consumers to their grocery stores in droves. Additionally, non-store retail sales, which includes internet-based outlets, rose 3.1% as customers turned to online shopping.
Retail sales excluding motor vehicles fell by 4.5% in March, below the 3.0% decline expected. Plummeting gasoline prices, already detailed in Friday’s CPI report, along with severely reduced driving, dragged down gasoline station sales by 17.2%.
Likewise, restaurants and bars turned to online orders and curbside deliveries to partially offset the substantial loss of customer traffic. It was not enough, however, as food services and drinking place sales plunged by 26.5%.
There were small gains in sales for building materials and health care items, and at general merchandise stores, but other categories saw significant declines.
The closely-watched control group – total sales excluding motor vehicles, gasoline, building materials, and food services – rose by 1.9% after a 0.1% decline in February.
Consumer spending will be a strong negative for first and second quarter GDP, with retail sales unlikely to rebound until COVID-related shutdowns end.
Also released at 8:30 a.m. ET, the Empire State index fell to a reading of -78.2 in April from -21.5 in March, well below the -35.0 reading expected. The record-low level eclipsed the previous low of -34.3 during the Great Recession, as the effects of the health crisis deepened, especially in the New York region.
There were declines in the survey for most of the categories, especially new orders, production, and employment. Delivery times grew longer as factories shuttered for much of the month.
The six-month outlook rose modestly in the month, but the April reading of 7.0 suggests only a modest recovery by the end of the year. The Philadelphia Fed manufacturing survey will be released on Thursday and is expected to be disappointing as well.
Industrial production, released by the Federal Reserve later in the morning, fell by 5.4% in March, below the 4.2% decline expected and the largest decline since January 1946.
Manufacturing production fell by 6.3%, led by a 28.0% drop in motor vehicle production as factories shuttered and parts from overseas were in short supply. Analysts had expected a 4.0% decline. Excluding motor vehicles, manufacturing production would still have been down 4.5% and overall industrial production would have been down 4.1%.
Utilities production fell 3.9%, with electricity production down 3.8% and natural gas production down 4.5%. Mining production was fell by 2.0%.
The Federal Reserve said, “The magnitude of the effect of the COVID-19 pandemic on industrial output was estimated using procedures comparable to those employed previously to assess the effects on production of significant weather events, such as Hurricanes Sandy and Katrina.”
For further information on the technical changes the Federal Reserve made to the data series to accommodate the stay-at-home orders, please see this website:
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Contact this reporter: kevin@macenews.com