U.S. retail sales fall in February, weather likely a factor

Market News

U.S. retail sales fall in February, weather likely a factor

U.S. retail sales unexpectedly fell for a third straight month in February likely as harsh weather kept consumers from automobile showrooms and shopping malls, which could hurt growth prospects for the first quarter. The Commerce Department said retail sales dropped 0.6% after declining 0.8% in January. The decline in sales last month was almost broad-based, suggesting that snowy and cold weather that blanketed the country in the second half of February could have been a factor.

It was the first time since 2012 that sales had dropped for three consecutive months. Economists polled by Reuters had forecast retail sales increasing 0.3% last month. Retail sales excluding automobiles, gasoline, building materials and food services were unchanged after a 0.1% decline in January.

The second straight month of weakness suggests a marked slowdown in consumer spending in the first quarter after the fourth quarter's surge. February's weak reading could see economists lowering their first-quarter GDP growth estimates. Economic activity early in the year was hurt by a harsh winter and the now-settled labor dispute at the country's West Coast ports, which disrupted the supply chain.

First-quarter growth forecasts currently range between an annualised pace of 1.7% and 2.5%. The economy grew at a 2.2% pace in the fourth quarter. In February, sales at clothing stores were flat. Receipts at building material and garden equipment stores fell 2.3% and sales at restaurants and bars slipped 0.6%. Receipts at online stores, however, rose 2.2%. Sales at sporting goods and hobby shops increased 2.3%.