Retail sales in the U.S. fell for the second month running in March, said the U.S. Department of Commerce in its latest release. This, combined with a drop in consumer prices for the first time in over a year, suggests that the U.S. economy lost a bit of momentum through the first quarter of 2017.
Last month, retail and food services sales — adjusted for seasonal variation, holiday and trading-day differences — totaled $470.8 billion. This represents a 0.2 percent decrease month-on-month from February, which itself saw an adjusted decrease of 0.3 percent from January.
This decline may turn out to be temporary, and some peg the consumer spending slowdown on late income tax refund disbursement. Still, refund delays likely only accounted for a small part of the consumer spending slowdown.
March retail sale numbers were largely influenced by weakness in the automobile sector. Auto dealerships saw spending fall for the third straight month, down 1.2 percent from February. Likewise, gas and service station sales dropped 1.0 percent due to lower fuel prices.
Core retail sales, meanwhile — those excluding auto, gas, building materials and food — actually rose 0.5 percent month on month from February. Compared to last year, retail sales actually increased 5.2 percent in March. The Federal Reserve is still expected to raise interest rates this coming June.
“For the Fed, the underlying momentum is more important in terms of policy decisions, and that looks to be strong, supported by a tightening labor market, rising incomes and high consumer confidence,” Gregory Daco, head of U.S. macroeconomics at Oxford Economics in New York, told Reuters.
Electronics and appliance stores saw the greatest month-on-month increase, growing sales some 2.6 percent from February, though still down 0.7 percent from the same period last year. Non-store retailers, whose numbers are largely driven by eCommerce sales, saw 0.6 percent growth over February and 11.9 percent growth year on year.