US retail sales rise past forecasts in February

US retail sales edged just slightly higher last month, but a closely-watched core measure climbed to a six-month high.

Total retail sales were up by 0.1% month-on-month in February to reach $473.99bn and 5.7% higher on the year-ago level, according to the Department of Commerce, boosted by higher turnover at building materials, personal care and non-store retailers.

Economists had expected a 0.1% month-on-month dip in retail sales.

That followed an upwardly revised gain of 0.6% on the month in January, which had originally been estimated as a gain of 0.4%.

Excluding motor vehicles and parts, sales rose by 0.2% on the month in February.

To take note of as well was the large upwards revision to January's estimate for the so-called retail sales 'control group' which excludes automobiles, gasoline and building materials.

That was revised to show a 0.8% jump for February, up from an initially estimated rise of 0.4%.

For Rob Martin at Barclays, the slowdown in retail sales was to be expected following two very strong months, what with core retail sales rising at an annualised clip of 3.9%. Tax refunds also ran "substantially below normal" in February, Martin also said, likely weighing on the pace of sales.

"Given ongoing improvements in the labor market and positive prospects for price increases, we expect nominal retail sales to rise more quickly in coming months."

For his part, Paul Ashworth, chief US economist at Capital Economics, flagged the acceleration in the three-month-on-three-month annualised growth rate for the control group of retail sales - whch hit a six-month high.

"For our part, we stuck with a forecast of a 2.0% annualised gain on the basis of the strength of the survey evidence, even as others were revising their forecasts well below that. Now those forecasters will need to revise their projections up again.

"Overall, inflation is trending gradually higher and underlying retail sales are healthy enough. There is nothing here to suggest that the Fed shouldn’t raise interest rates at the FOMC meeting, which concludes later today."

As of 1521 GMT, and ahead of the US Federal Reserve's policy announcement due later in the day, the yield on the benchmark 10-year US Treasury was down by two basis points at 2.58%.