Retail Sales Fall Unexpectedly in March As Consumers Save

Sales at retailers across the U.S. fell unexpectedly during March, which has raised concerns that spending by consumers is losing its momentum.

The drop of 0.3% in purchases followed February’s little change in figures released by the Commerce Department on Wednesday. The average forecast of economists called for an increase in retail sales of 0.1%.

The decrease was driven by the largest drop in demand for vehicles in one year and the cutbacks experienced by clothing stores, restaurants and online businesses.

Sustained increases in spending by consumers, the largest part of the U.S. economy, are needed during a time that exports remain depressed by the sluggish global markets. Manufacturing in the U.S. is hardly emerging from its slump.

A chief economist in the U.S. said the country was experiencing a soft patch for consumers, without an obvious rationale. It is definitely a softer start to this year, but provided gains in jobs remain strong, consumer spending should continue to be solid.

One survey estimated that retail sales would range from a drop of 0.8% to an increase of more than 0.4%. The tally in February was reported previously at a drop of 0.1%.

While nine of the 13 major categories in retail showed increases in March, the increases were not big enough to offset a drop in spending on clothing, autos and in restaurants.

Auto dealers’ sales fell by 2.1% during March, the largest drop since February of 2015. That was in line with data from the industry released earlier in April that indicated that the torrid pace of demand for cars was starting to level off.

Purchases of cars as well as light trucks increased at an annualized rate of 16.5 million during March, the slowest increase in over one year, according to an automotive reporting group.

Excluding vehicles, purchases increased 0.2% in March after changing little during February, showed the report on Wednesday.

The increase has been paced by a jump of 0.9% in service station receipts that likely reflected the recent increase nationwide in prices of gasoline.

The retail sales information from the Department of Commerce is not adjusted for any prices, so higher prices of fuel boost the receipts at service stations.

 

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