U.S. retail sales dropped in February and the prior month’s gain was revised to a decline, calling into question the narrative that bigger gains in consumer spending would propel economic growth at the start of 2016.
The 0.1 percent decline in purchases followed a revised 0.4 percent January decrease, Commerce Department figures showed Tuesday. Sales excluding gasoline rose 0.2 percent in February, reversing the previous month’s retreat.
The decrease in purchases, which included auto dealers, department stores and furniture outlets, showed Americans were salting away money saved at the gas pump amid volatile financial markets. The disappointing reading on the biggest part of the economy comes as Federal Reserve officials meet to gauge whether growth is strong enough to eventually warrant another increase in interest rates.
The median forecast in a Bloomberg survey called for a 0.2 percent drop in February, with estimates ranging from a decline of 0.7 percent to a 0.4 percent gain. January’s reading was initially reported as a 0.2 percent increase.
The January revision reflected big downward adjustments to sales of electronics and appliances, building materials, personal-care items and department-store merchandise.
In February, eight of 13 major retail categories showed declines, indicating the drop was also broad-based. Purchases at furniture outlets decreased 0.5 percent and sales at general merchandise stores fell 0.2 percent.
Core sales, the figures that are used to calculate gross domestic product and which exclude such categories as autos, gasoline stations and building materials, were unchanged last month after a revised 0.2 percent increase in January. The prior month had previously been recorded as a 0.6 percent gain.
Service-station receipts dropped 4.4 percent, the most since September, on lower gasoline costs. Auto dealers fell 0.2 percent in February, matching the drop a month earlier. Purchases excluding excluding autos and gasoline rose 0.3 percent after a 0.1 percent decline.
The auto figures are in line with industry data, which eased a bit in February. Cars and light trucks sold at a 17.4 million annualized rate last month, based on Ward’s Automotive Group figures.
Retail sales excluding autos fell 0.1 percent after a 0.4 percent decrease in January, according to Tuesday’s report.
Households are finding support from still-cheap fuel costs and a strengthening labor market. The average cost of a gallon of regular gasoline was $1.94 on March 13, according to AAA, the biggest U.S. motoring group. While prices at the pump have been rising for the past month, the latest figure compares with an average $2.40 in 2015.
Payrolls climbed by a more-than-forecast 242,000 in February, while the unemployment rate held at an eight-year low of 4.9 percent.
Household spending, which makes up about 70 percent of the economy, may accelerate in the first three months of this year, according to economists’ projections as of March 14. Consumer purchases will rise at a 2.9 percent annualized pace in the first quarter after a 2 percent rate in the previous three months, according to the data compiled by Bloomberg.