US retail sales grow 'moderately' in March amid tariff worries

Retail sales in the United States grew in March following two consecutive months of decline. However, the increase in retail sales was 'moderate' as consumers remain cautious and concerned about the impact of climbing tariffs, according to the latest CNBC/NRF Retail Monitor.

"Retail sales increased in March but only moderately, and the spending came before the president's 'Liberation Day' tariff announcement," said Matthew Shay, CEO and president of NRF, in a statement. "The pullback we've seen the past few months comes despite strong economic fundamentals. A major factor appears to be driven by the uncertainty caused by tariffs." 

Total retail sales in March showed solid momentum, with overall figures—excluding automotive and gas—rising 0.6 percent from the previous month (seasonally adjusted) and climbing 4.75 percent compared to the same time last year (unadjusted), according to the NRF Retail Monitor. This marks a notable shift from February, which saw a 0.22 percent monthly dip and a 3.38 percent annual gain.

Retail sales up in March prior to 'Liberation Day' tariffs

Focusing on core retail categories—excluding restaurants, auto dealers, and gas stations—sales grew by 0.4 percent month over month in March and posted a 5.07 percent increase year over year. In contrast, February recorded a 0.22 percent monthly decline and a 4.11 percent annual rise.

During the first quarter of the year, total retail sales rose by 4.52 percent compared to the same period last year, while core retail sales saw a 4.96 percent increase. March's performance reflected the shift in consumer behavior following President Donald Trump's announcement of tariffs on China, Canada, and Mexico in February, but before his broader April 2 declaration of a minimum 10 percent tariff on all US trading partners and sweeping "reciprocal" tariffs on multiple countries.

Although these reciprocal tariffs have been temporarily suspended for 90 days, tensions with China have intensified, with both countries engaging in a series of escalating trade measures. Even ahead of these developments, a survey by Prosper Insights & Analytics for the NRF revealed that 46 percent of consumers were already buying appliances, clothing, and other goods earlier than usual in March out of concern that prices could rise due to the looming tariffs.

Retail sales in March showed positive year-over-year growth across every major sector, with digital products, general merchandise stores, sporting goods, hobby, music, and book stores leading the way, according to the NRF Retail Monitor. On a month-over-month basis, five out of nine retail categories posted gains, reflecting steady consumer demand across a variety of segments.

Digital products saw the most significant growth, with sales rising 0.79 percent from February on a seasonally adjusted basis and jumping an impressive 27.62 percent compared to March of last year. General merchandise stores also performed well, registering a 0.48 percent month-over-month increase and a 7.62 percent rise year over year. Sales at sporting goods, hobby, music, and bookstores remained unchanged from the previous month but were up 6.63 percent compared to the same time last year.

For fashion retailers, it may be interesting to note that clothing and accessories stores saw a 0.76 percent increase from February and a 2.37 percent rise compared to the same period last year. Furniture and home furnishings stores held steady with a marginal 0.01 percent monthly uptick and a 1.81 percent annual increase. 

"March's increase is partly the result of stocking up to get ahead of tariffs," added Shay. "With the economic outlook unclear and the situation fluid, consumer sentiment is weakening, and many consumers are shifting disposable income into savings."