US Retail Sales Fell Unexpectedly In March As Americans Cut Back On Buying Cars

U.S. retail sales unexpectedly fell in March as households cut back on purchases of automobiles, further evidence that economic growth stumbled in the first quarter.

The Commerce Department said Wednesday that retail sales declined 0.3 percent last month after being unchanged in February. Economists polled by Reuters had forecast retail sales edging up 0.1 percent last month.

Retail sales excluding automobiles, gasoline, building materials and food services ticked up 0.1 percent last month after an upwardly revised 0.1 percent gain in February.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Economists had forecast core retail sales rising 0.3 percent last month.

Consumer spending accounts for more than two-thirds of U.S. economic activity. March's weak reading added to recent data on trade, wholesale inventories and business spending in suggesting the economy hit a soft patch in the first three months of the year.

Economic growth estimates for the first quarter are currently as low as a 0.2 percent annualized rate. The economy expanded at a 1.4 percent pace in the fourth quarter.

Retail sales remain lackluster despite a strengthening labor market, which is starting to boost wages. Part of the weakness could be due to a stock market sell-off early this year, which hurt consumer sentiment. The value of sales is also being restrained by low prices, as retailers offer huge discounts to clear unwanted merchandise clogging up warehouses.

Last month, auto sales dropped 2.1 percent, the largest decrease in just over a year, after being unchanged in February. Households are buying fewer automobiles after record purchases last year.

Receipts at service stations rose 0.9 percent in March, the biggest gain since June, as gasoline prices turned higher.

Other data in the report were generally mixed. Receipts at clothing stores fell 0.9 percent. Sales at online retailers dipped 0.1 percent and receipts at sporting goods and hobby stores rose 0.2 percent.

Sales at electronics and appliance outlets rose 0.1 percent. Building materials and garden equipment store receipts increased 1.4 percent, while sales at restaurants and bars fell 0.8 percent.