US retail sales dip in Feb.; Barclays slashes GDP view
U.S. retail sales fell less than expected in February, but a sharp downward revision to January's sales could reignite concerns about the economy's growth prospects.
The Commerce Department said on Tuesday retail sales dipped 0.1 percent last month as automobile purchases slowed and cheaper gasoline undercut receipts at service stations.
January's sales were revised to show a 0.4 percent decline instead of the previously reported 0.2 percent increase. Economists polled by Reuters had forecast retail sales slipping 0.2 percent in February.
Following the data release, Barclays cut its U.S. GDP forecast to 1.9 percent from 2.4 percent.
Retail sales excluding automobiles, gasoline, building materials and food services were unchanged after a downwardly revised 0.2 percent increase in January. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product and were previously reported to have risen 0.6 percent in January.
Last month's weak reading, together with January's modest gain, suggest that consumer spending will probably remain tepid in the first quarter after growing at a 2.0 percent annualized rate in the fourth quarter.
The report came as Federal Reserve officials prepared to gather for a two-day policy meeting. The U.S. central bank is expected to leave interest rates unchanged as policymakers monitor developments on global financial markets, domestic inflation and the labor market.
The Fed hiked its benchmark overnight interest rate in December for the first time in nearly a decade.
A 4.4 percent drop in the value of sales at service stations weighed on retail sales last month. Gasoline prices dropped 9 percent in February, according to the U.S. Energy Information Administration, as oil prices fell further.
Retail sales were also hurt by a 0.2 percent fall in sales at auto dealerships. Auto sales declined 0.2 percent in January.
Clothing store sales rose 0.9 percent last month. Receipts at building materials and garden equipment stores gained 1.6 percent, while sales at furniture stores fell 0.5 percent.
Sales at sporting goods and hobby stores rose 1.2 percent and sales at restaurants and bars increased 1.0 percent. Receipts at electronics and appliance stores slipped 0.1 percent. Online store sales dropped 0.2 percent.