Baird: Softline spending holds steady despite oil price shock in March

Investing.com -- Personal consumption expenditures grew 5.7% year-over-year in March, accelerating from February's upwardly revised 5.6%, according to the Bureau of Economic Analysis Personal Income and Outlays report released Friday. Personal income rose 0.6% month-over-month, outpacing the consensus estimate of 0.5%.

The data reflects the first post-Epic Fury period, with higher gas prices driving approximately 100 basis points of acceleration in non-discretionary goods spending, according to Baird's analysis. The savings rate declined 30 basis points month-over-month to 3.6%, absorbing the shock from increased fuel costs.

Softline spending, which includes apparel, footwear, accessories, personal care and home goods, decelerated approximately 10 basis points month-over-month but remained strong year-over-year at 6.5%, compared to 6.6% in February. The two-year stack for softlines reached 12.1%, up from 11.7% in February.

Within softlines, apparel grew 6.8% year-over-year in March, down from 7.3% in February. Footwear and accessories increased 8.3% year-over-year, nearly flat from February's 8.4%. Personal care held steady at 5% year-over-year, while home goods rose 5.2%, compared to 5.1% in February.

Non-discretionary expenditures grew 5.8% year-over-year in March, up from 4.9% in February, driven primarily by transportation costs, which jumped 12.1% from 2.9% the previous month. Fuel costs surged 21.4%, reversing February's 6.5% decline.

Discretionary expenditures grew 4.1% year-over-year, decelerating from February's 5.4%, with big-ticket durables declining 1.9% compared to a 3.8% increase in February.

Disposable personal income decelerated approximately 10 basis points to 4% year-over-year, with employee compensation slowing about 20 basis points to 4.1%. Savings fell 26.3% year-over-year.

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