U.S. retail sales miss forecasts after steep drop in prior month
U.S. retail sales rose by less than forecast after a steep drop to start the year, underscoring concerns about the durability of consumer spending.
The value of retail purchases, unadjusted for inflation, increased 0.6% from January after a downward revision to the prior month, Commerce Department data showedThursday. Excluding cars,sales advanced 0.3%.
Eight out of 13 categories posted increases, led by building-material stores and auto dealers, which rose by the most since May. Spending fell at furniture outlets, as well as stores for health and personal care, clothing and ecommerce.
So-called control-group sales — which are used to calculate gross domestic product — were unchanged in February after falling in the prior month. The measure — which excludes food services, auto dealers, building-materials stores and gasoline stations — suggests weaker economic activity so far in the first quarter.
Under the surface, Thursday’s report points to a consumer who’s growing more discerning as the labor market starts to cool somewhat, credit access becomes more limited and higher prices continue to bite.
Even so, a separate report Thursday showed applications for unemployment benefits remained historically low last week. A strong labor market, as well as stubborn inflation, have been cited by the Federal Reserve as reasons to leave interest rates unchanged for a fifth straight meeting when officials gather next week.
The Fed’s recent Beige Book survey of regional business contacts indicated shoppers are increasingly becoming more sensitive to prices. Other data this week showed consumer and producer prices topped forecasts for a second month in February, reflecting rising costs for goods after months of declines.
Even though inflation progress is moving sideways at the moment, most economists and executives expect price pressures to continue retreating, which could help support spending in the near term.