American small businesses closed out the first quarter on solid ground, with sales rising 1.3% year over year in March despite consumers trimming the number of trips they made and spending more deliberately when they did show up, according to new data from Fiserv.
The Fiserv Small Business Index climbed to 144 in March, a seasonally adjusted reading that reflects continued resilience across the small business economy. While overall transaction volumes — a proxy for foot traffic, dipped 1.3% compared to a year earlier, average ticket sizes grew 2.6% year over year and 0.2% month over month, picking up the slack. Month-over-month, both sales and foot traffic ticked slightly higher compared to February, up 0.7% and 0.5% respectively.
High gas prices created bigger purchase tickets
Starting February, the whole world felt the effect of US-Iran war taking toll on household budgets. Gasoline station sales surged 12.7% year over year. This revenue was not the result of heavier demand. It’s just that average ticket sizes jumped about the same percentage. The ripple effect showed up in often unexpected places. Thus, limited-service restaurant sales fell 2.9% annually seeing foot traffic drop of more than 4%. Obviously, consumers were actively cutting back on fast food to offset fuel costs. Nonetheless, full-service dining held up significantly better, posting modest sales growth of 0.4% with only a slight dip in visits.
Retail broadly improved from February, with total sales gaining 1.2% month over month, though gasoline accounted for most of that jump. Yet, some categories like building materials, furniture, and auto parts posted gains not just because of price growth but since shoppers actually bought more of them. Groceries were down 0.5% month over month and 1.5% year over year. Presumably, budget-conscious shoppers tried to combine some cost savings with the benefits of dieting.
Some things never change in retail
The broader spending patterns remained highly predictable. Without any surprises, essential categories outpaced discretionary ones for the 12th month in a row. Essentials sales grew 1.9% year over year while discretionary spending saw more modest 0.8% gains. This gap has become one of the more durable patterns in post-pandemic consumer behavior.
It is also unlikely to fade away any time soon since 59% of Americans now believe the U.S. economy is getting worse along with the cost living crisis. In these circumstances, discretionary spending remains luxury for many consumers.
The Fiserv index is based on the point-of-sale transaction data registered across roughly two million U.S. small businesses. This data pool covers card, cash, and check purchases in-store and online.
