Retail sales in March fell the most in nine months.
Retail sales and consumer confidence have taken a downturn, but the reasons for it aren’t clear, while producer prices fell and business inventories have barely moved higher.
The U.S. Commerce Department reports retail sales in March fell the most in nine months, dropping 0,4% from the month before. The decline follows a 1% increase in February, the largest since June of last year.
The March performance failed to live up to a consensus estimate by economists who were predicting no change for the month.
This came as a new poll shows consumer confidence in April falling to a nine-month low. The Thompson Reuters/University of Michigan consumer sentiment index declined from a 78.6 reading last month to 72.3 this month. Like the retail sales figures, economists were expecting no change.
The news has led many analysts to cut their growth forecast for the U.S economy for this year. Barclays now predicts first quarter growth will be at an annual rate of 2.8% compared to an earlier expectation of a 3.2% growth rate.
There is a general feeling among economists that reinstating the full payroll tax the first of the year has slowed economic growth because consumers have less take-home pay. Conversely, it's worth noting retail sales in the first three months of the year have been volatile, making it difficult to determine whether this disappointing economic news is the result of the tax hike or other factors such as severe weather during the first quarter.
Two other separate government reports show producer prices fell 0.6% in March following a 0.7% gain in February, due mostly to a decline in energy costs. Business inventories moved just 0.1% higher in February, the weakest gain in nine months.