By Barbara Marcolini

The U.S. Census Bureau releases the March retail sales index on Wednesday, April 14, at 8:30 am. Economists surveyed by Bloomberg expect a modest increase of 0.1 percent in the headline number, but growth can be a little higher for core retail spending, which excludes  auto sales. Here are the five main points to watch in the report:   

  1. What’s the impact of higher gasoline prices?

After months of decline, gasoline prices are finally going up – which may be bad for drivers, but pushes retail numbers upwards. Falling oil prices caused a 4.4 percent change drop on gas receipts in February, and gasoline sales have plummeted 15.6 percent on a year to year comparison. But now a gallon is on average 20 cents higher than it was one month ago, which indicate gas stations may have a better performance in March. “Gasoline sales will be less an issue,” said David Sloan, senior economist at 4Cast Inc. “We can expect a modest, but positive growth.”

  1. How much car sales can bring retail down?

Auto sales were only 3 percent up in March, while the market expected a 7 percent growth from the previous year. Even if the number is not actually bad, it indicates that the auto industry may be slowing down its growth – which will definitely affect retail’s nominal index. “We did see some disappointing numbers for auto sales this past month, so the auto numbers are important to watch,” said Sloan.

  1. Are core retail sales getting stronger?

If we exclude auto, the core retail sales say a lot about consumers – and that’s what matters the most in this index. In the past months, core retails were disappointing because consumers were spending less despite the savings with low gas prices and the stronger labor market. In February, core retail sales went 0.3 percent down from the previous month. “We’ve had good employment numbers and modestly higher wages,” said Gregory Daco, lead economist at Oxford Economics. “The pace at which core retail sales are rising will say a lot about the momentum in consumer spending.”

  1. Are consumers finally spending more?

So, if core retail is up, it means consumer spending is up – and that directly affects GDP growth. Retail numbers will be the first to give a sense on the first quarter’s performance and to give a hint of the coming months. “We’re expecting GDP growth to be about 2 percent. If we see a stronger momentum in consumer spending, that could boost the first quarter of the year,” said Daco. But the past two months were quite disappointing for consumer spending – both were only 0.1 percent higher – and that’s why March’s number can be a game changer. “It will be interesting to see if consumers are still unwilling to spend,” said Sloan.

  1. What the revision will look like?

In February’s release, the biggest surprise came from January: the month’s number was drastically revised downwards, going from a 0.2 gain to a 0.4 percent decrease. Revisions are usually hard to predict, but they can completely change the understanding of a scenario. “It’s always important to watch the net revisions. Last month’s revision for January was quite disappointing,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez, Inc.