Sales at US retailers unexpectedly fell in March after two months of increases, a government report showed on Tuesday, dimming hopes the recession was close to hitting bottom. However, Federal Reserve Chairman Ben Bernanke stayed upbeat and referenced the hopeful economic signs despite the 16-month long recession.
The Commerce Department said total retail sales dropped 1.1 percent after rising 0.3 percent in February. March sales were weighed down by declining purchases for big-ticket items like motor vehicles and electronic goods.
"This throws some cold water on the idea that we're carving out a bottom. As long as you have initial jobless claims running around 650,000 and getting revised higher week after week, I don't see a recovery," Jacob Oubina a currency strategist at Forex.com, Bedminster, New Jersey.
The price on benchmark 10-year US Treasury notes rose to fresh session highs early Tuesday, as US stocks turned negative on the weaker-than-expected economic data, reviving a safe-haven bid for bonds. The dollar extended losses against the yen. Retail sales had risen for two consecutive months, giving way to cautious optimism among economists and the Fed that the economic downturn was close to reaching a bottom. "Recently we have seen tentative signs that the sharp decline in economic activity may be slowing, for example, in data on home sales, home building and consumer spending, including sales of new motor vehicles," Bernanke said.
"A levelling out of economic activity is the first step toward recovery," he said in remarks prepared for delivery at Morehouse College in Atlanta. March's report showed weakness across the board as consumers, worried about their financial future, were reluctant to loosen their purse strings. "This serves as a reminder that the recession is still here and that rising unemployment, declining income as well as a deep plunge by household net worth will adversely affect retail sales indefinitely," said John Lonski, chief economist at Moody's Investors Service.
Excluding motor vehicles and parts, sales fell 0.9 percent in March, compared to a 1 percent gain the prior month. The data highlighted the continuing problems in the US auto industry, with vehicle and parts sales dropping 2.3 percent after a 3 percent decline in February.
Gasoline sales fell 1.6 percent in March after increasing by 3.1 percent the previous month. Sales of electronic goods tumbled 5.9 percent, versus a 0.7 percent gain in February, while building materials eased 0.6 percent after slipping 0.5 percent.
In another report, the Commerce Department said US business inventories fell 1.3 percent in February after declining by a similar margin the prior month. Motor vehicle and parts inventories dropped l.3 percent in February. Separately, the Labour Department said US producer prices fell in March and also recorded their largest year-over-year decline since 1950 as subdued demand makes it hard for producers to raise prices.
The index for prices paid at the farm and factory gate fell 1.2 percent last month versus a 0.1 percent gain in February. Compared with the same period last year, producer prices were 3.5 percent lower, the largest decline since a 3.9 percent fall in 1950, the department said. Core producer prices, which exclude food and energy costs, were unchanged in March compared with a forecast for a 0.1 percent rise. The core producer price index stood 3.8 percent higher from the same month last year.
Comments
Comments are closed.