Sales at US retailers fell in March, snapping two months of increases, a government report showed today, indicating the recession was far from hitting bottom as mounting unemployment depress consumer spending.
The Commerce Department said total retail sales dropped 1.1 per cent after rising a revised 0.3 per cent in February. March sales were weighed down by declining purchases for big-ticket items like motor vehicles and electronic goods.
"This throws some cold water on the idea that we're carving out a bottom. As long as you have initial jobless claims running around 650,000 and getting revised higher week after week, I don't see a recovery," Jacob Oubina a currency strategist at Forex.com, Bedminster, New Jersey.
Dow industrial and S&P 500 equity index futures turned negative while US Treasury debt prices rose after the data. The US dollar extended losses against the yen.
Retail sales had risen for two consecutive months, giving way to cautious optimism that the economic downturn, now in its 16th month, was close to reaching a bottom.
March's report showed weakness across the board as consumers, worried about their financial future, were reluctant to loosen their purse strings.
"This serves as a reminder that the recession is still here and that rising unemployment, declining income as well as a deep plunge by household net worth will adversely affect retail sales indefinitely," said John Lonski, chief economist at Moody's Investors Service.
Excluding motor vehicles and parts, sales fell 0.9 per cent in March, compared to a 1 per cent gain the prior month. The data highlighted the continuing problems in the US auto industry, with vehicle and parts sales dropping 2.3 per cent after a 3 per cent decline in February.
Petrol sales fell 1.6 per cent in March after increasing by 3.1 per cent the previous month.
Sales of electronic goods tumbled 5.9 per cent, versus a 0.7 per cent gain in February, while building materials eased 0.6 per cent after slipping 0.5 per cent.
A separate report from the Labor Department showed US producer prices fell in March and also recorded their largest year-over-year decline since 1950 as subdued demand makes it hard for producers to raise prices.
The index for prices paid at the farm and factory gate fell 1.2 per cent last month versus a 0.1 per cent gain in February.
Compared with the same period last year, producer prices were 3.5 per cent lower, the largest decline since a 3.9 per cent fall in 1950, the department said.
Reuters