Retail sales in the United States fall unexpectedly with the slowdown in the economy

By Lucia Mutikani

WASHINGTON (Reuters) – US retail sales tumbled unexpectedly in February, the latest sign being a sign of economic growth, as the reduction in tax cuts rose to 1,500. billions of dollars and that public spending has decreased.

There was however encouraging news about the economy. Other reports released on Monday showed a recovery in manufacturing activity in March and the third consecutive monthly increase in construction spending in February. The risks to economic growth in the first quarter, however, remain downward.

This loss of speed also reflects rising interest rates, slowing global growth, Washington's trade war with China, and uncertainty over Britain's departure from the European Union.

These factors contributed to last month's decision by the Federal Reserve to abruptly end its three-year campaign to tighten monetary policy. The US central bank dropped expectations of rising interest rates this year after raising borrowing costs four times in 2018.

"The consumer is lost in the woods, which creates a gloomy economic outlook this year," he said, failing to find his way, "said Chris Rupkey, chief economist at MUFG in New York. "It was wise for the Fed to go out of business."

Retail sales fell 0.2%, as households reduced their purchases of furniture, clothing, food and electronic products and appliances, as well as building materials and gardening equipment. January data were revised upward to indicate that retail sales increased 0.7% instead of increasing 0.2% as previously reported.

Economists polled by Reuters forecast a 0.3% increase in retail sales in February. Retail sales were up 2.2% in February from the previous year.

The unexpected drop in sales in February may partly reflect delays in processing tax refunds in the middle of the month. Tax refunds were also lower on average than in previous years, following the redesign of the tax code in January 2018. The cold and wet weather could also have hurt sales.

The February retail sales report was delayed by a 35-day partial closure of the federal government that ended on January 25. The March retail sales report, due to be released on April 16, will be released on April 18.

The dollar was trading lower against a basket of currencies, while Treasury prices were down. US stocks have increased.

Excluding automobiles, gasoline, building materials and food services, retail sales fell 0.2% in February after a revised upward increase of 1.7% in January. . These so-called basic retail sales correspond most closely to the consumption expenditure component of the gross domestic product.

REQUEST FOR WEAKENING

Previously, they would have rebounded 1.1% in January. Consumer spending accounts for more than two-thirds of economic activity. The sharp upward revision of core retail sales in January was not enough to reverse the more than 2.0% drop in December, leaving the forecast for sluggish GDP growth in the first quarter intact.

Growth estimates for the January-March quarter are as low as an annualized rate of 0.8%. The economy grew 2.2% in the fourth quarter, after growing 3.4% between July and September.

But green shoots appear in some sectors of the economy. The Institute of Supply Management announced Monday in another report that its index of domestic plant activity had reached 55.3 in March, up from 54.2 in February, representing the highest level low since November 2016.

The reading was slightly higher than the expectations of 54.5 according to a Reuters survey of 69 economists. A value greater than 50 indicates an expansion of the manufacturing sector and a value less than 50 a contraction.

Another Department of Commerce report shows that construction spending rose 1.0% in February, following a 2.5% increase in January.

February's retail sales report showed that revenue for building materials and gardening equipment and supplies fell 4.4%, the largest decline since April 2012. Revenues at clothing stores decreased by 0.4% and those of furniture stores by 0.5%.

Sales at food and beverage stores declined 1.2%, the largest decline since February 2009. Revenues at electronics and appliance stores declined 1.3%, the largest decrease since May 2017.

But consumers bought more motor vehicles, with auto dealer sales rebounding 0.7% after a 1.9% decline in January. Households also spent more at gas stations, which probably reflects higher prices for gasoline.

On-line and mail order retail sales increased 0.9%. Sales in restaurants and bars rose 0.1% and spending at hobby, musical instrument and bookstore stores rose 0.5%.

The fourth report of the Department of Commerce highlighted the slowdown in demand. Business inventories rose 0.8% in January.