Retail sales in the U.S. rose 0.2% month-over-month in February 2025, rebounding from a sharply downwardly revised 1.2% decline in January but falling well short of market expectations for a 0.6% increase.
US retail sales rise less than expected
The data suggests that consumer spending remains fragile amid ongoing inflationary pressures and economic uncertainty.
Seven of the report’s 13 categories saw declines, with the largest drops in food services & drinking places (-1.5%) and gasoline stations (-1%), indicating possible shifts in discretionary spending. Other notable declines included clothing (-0.6%), motor vehicle & parts dealers (-0.4%), sporting goods, hobby, musical instrument, & book stores (-0.4%), miscellaneous store retailers (-0.3%), and electronics & appliance stores (-0.3%).
On the other hand, nonstore retailers led gains with a strong 2.4% increase, reflecting continued growth in e-commerce. Health & personal care stores also posted solid growth (1.7%), while food & beverage stores (0.4%), general merchandise stores (0.2%), and building material stores (0.2%) saw more modest gains. Sales at furniture stores remained flat.
Key highlight is the so-called control group
A key highlight was the so-called control group, which excludes food services, auto dealers, building materials, and gasoline stations—this metric, which directly feeds into GDP calculations, surged 1% in February, fully reversing January’s downwardly revised 1% drop and significantly exceeding forecasts of a 0.2% rise. The sharp increase in this measure suggests underlying resilience in core consumer spending, potentially offsetting broader weakness in headline retail sales.
Despite the mixed report, investors remain cautious about the overall economic outlook, as the combination of sluggish retail sales growth and persistent inflationary pressures continues to shape expectations for Federal Reserve policy in the coming months.
