US retail sales fell for a second straight month in March and consumer prices dropped for the first time in just over a year, underscoring the magnitude of the loss of economic growth momentum in the first quarter.But with the labor market near full employment, Friday's weak reports failed to change views that the Federal Reserve will raise interest rates again in June.
Sales at US retailers fell in March for the second month in a row, marking the worst two-month stretch in two years.
In March, electronics stores had a particularly strong month, as did clothing stores switching over to spring apparel. Purchases at non-store retailers rose 0.6% for a second month, while sales at general merchandise stores rose 0.3%.
Economists polled by Reuters had forecast retail sales slipping 0.1 percent last month.
Sales fell 0.2%, led by a decline in the auto industry.
These increases could be related to consumers' desire to shop at stores holding sales prior to closing.
However, the increases were offset by significant declines in sales by building material and supplies dealers and gas stations.
What made the decline seem even worse, though, was a government update to sales figures for February that showed a 0.3% drop instead of a 0.1% increase as originally reported.
March sales for furniture and home furnishings retailers were up 2.9% in March over the same month past year, well behind the 5.2% gain for the broader overall retail and food services sector.
Winter Storm Stella, which blasted through the Northeast in March, may have also impacted sales in March. Just yesterday, JCPenney announced it would postpone the closing of 138 stores after the locations saw an increase in recent sales. As a result, the year-on-year increase slowed to 2.0 percent. Monthly consumer inflation was also weighed down by a record 7.0 percent drop in the cost of wireless telephone services.
The consumer price index decreased 0.3% vs. forecasts for no change, following February's 0.1% gain. While household outlays are projected to cool in the first quarter, steady hiring, healthier household balance sheets and more optimistic consumers will probably underpin spending.