Sales fell by 0.6% in February, the third monthly drop in a row. However analysts have said the unusually harsh winter in the States can explain the fall to some extent.
Nevertheless the data will buy the Federal Reserve a little more time before it has to raise interest rates, according to some economists.
Anna Stupnytska, global economist at Fidelity Worldwide Investment said the sales data makes a Fed rate hike as early as June less likely, with September a better bet.
“Weak retail sales data today adds to a long list of softer indicators in the US. The cause of the weak sales data is likely to be the subject of much debate,” she said.
“Weather conditions and disruptions related to the west coast strike may have played a role, but I think this weakness is broader-based than that. With the Fed increasingly focused on data, I think the growing consensus around a June hike is looking less justified. The pace of US growth slowed visibly over the past month, and while it is hard to disentangle different factors, the effects of lower energy prices on related production and capital expenditure, as well as a stronger dollar are almost certainly playing a role too.”
“This weakness is likely to be temporary, and as the one-off factors phase out over the next couple of months and consumption picks up further, growth should start to stabilise towards the second half of this year,”Stupnytska continued. “In the meantime, markets have so far ignored this loss of momentum, focusing exclusively on the strong labour market. But despite the solid payroll gains in the latest employment report, earnings growth clearly remained a weak spot.”
