U.S. Retail Sales Slump 1.0% In March, Much More Than Expected

A report released by the Commerce Department on Friday showed U.S. retail sales fell by much more than expected in the month of March.

The Commerce Department said retail sales tumbled by 1.0 percent in March after dipping by a revised 0.2 percent in February.

Economists had expected retail sales to decline by 0.4 percent, matching the drop originally reported for the previous month.

The bigger than expected decrease in retail sales partly reflected a continued slump in sales by motor vehicle and parts dealers, which dove by 1.6 percent in March after plunging by 1.3 percent in February.

Excluding the steep drop in sales by motor vehicle and parts dealers, however, retail sales still slid 0.8 percent in March after coming in unchanged in February. Ex-auto sales were expected to dip by 0.3 percent.

Gas station sales plummeted by 5.5 percent amid lower gasoline prices, while sales by department stores, electronics and appliance stores, building materials and equipment dealers and clothing and accessories stores also showed notable decreases.

Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, also fell by 0.3 percent in March after climbing by 0.5 percent in February.

“The March retail sales report follows a string of recent data pointing to gently cooling growth dynamics,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics.

“Demand and supply are moving into a healthier balance, but Fed officials will want to see more evidence that GDP growth is on a cooler trajectory and inflation is on a clear path down to 2%,” he added. “As a result, we expect another 25bps rate hike in May.”

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