U.S retail sales drop by 0.5% in February as Coronavirus starts to reflect in the data

The U.S Census Bureau released its monthly report on retail sales on Tuesday. The data showed retail sales to have declined in February that suggested the consumer sector to have started to reflect the impact of Coronavirus.

According to the Commerce Department, retail sales saw a 0.5% decline in February as compared to a 0.6% increase that was recorded in January. Analysts had expected the growth in U.S retail sales to remain capped at 0.2% in February.

U.S Core Retail Sales Drop By 0.4% In February

Tuesday’s data also blamed multiple sectors to have contributed to the decline in the monthly retail sales including a 0.9% drop in auto sales and a 2.8% decline in sales at the gasoline stations. Excluding the volatile components of motor vehicles and relevant parts, the so-called core retail sales were reported 0.4% down in February.

According to the experts, Tuesday’s retail sales report doesn’t cover the data from last week in which the U.S economy was pushed into a near halt. Multiple retailers including Nordstrom, Guess, Casper, Abercrombie & Fitch, etc. announced a temporary shutdown in the U.S last week in an attempt to contain the spread of the flu-like virus. Following a second emergency rate
cut by the U.S Federal Reserve, Dow Jones also slumped to a record low last week.  

The U.S government had also recommended people to stay at home unless absolutely necessary towards the end of last week.

Consumer spending currently makes up 70% of the United States’ economic activity. With consumer spending being heavily weighed by Coronavirus, Economists believe that the country is at an all-time high risk of being pushed into recession.

Coresight Research Estimates 15,000 Stores To Close In 2020

CEO Deborah Weinswig of Coresight Research estimated 15,000 stores to close in 2020. In her previous forecast, she had anticipated only 8,000 stores to temporarily suspend operations amidst the Coronavirus crisis. While the majority of the businesses have closed stores for two weeks, Weinswig expects the shut down to extend to around three months.

Despite the downbeat report, the U.S dollar index sustained strength on Tuesday and climbed from a daily low of around 98.00 level to a high of 99.75. The forex market also responded aggressively to the surge in the U.S dollar index on Tuesday. EUR/USD dropped from a high of 1.1175 earlier today to a low of 1.0980. The currency pair is still struggling to rise above 1.10 level.