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United States retail sales fall for a third month amid slowdown

United States retail sales fall for a third month amid slowdown

US consumers spent less at auto dealers, gas stations and department stores in February, causing overall retail sales to slip 0.1 per cent despite signs elsewhere of a robust economy and the tax cuts signed into law by President Donald Trump starting to take effect.

It is also the first time since April 2012 that retail sales have declined for the third straight month.

Month-to-month comparisons don't tell the whole story because of seasonal adjustment factors, but the three-month moving average and other year-over-year numbers are better indicators that reflect how sales are really increasing.

Excluding cars, gasoline, construction materials and food, the retail sales rose by 0.1% in February after falling unchanged in January. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Mr Trump hopes that his tax cuts, passed at the end of previous year, will boost the economy in part by powering a rise in consumer spending, which accounts for two thirds of the United States economy. Fed officials view the labour market as being near or a little beyond full employment.

It pointed out that consumer confidence surged in February to levels not seen since late 2000, primarily driven by the strengthening job market.

Economists believe that a tightening labour market, weak dollar and fiscal stimulus in the form of the tax cuts and increased government spending will lift inflation toward the Fed's 2 percent target this year. GDP growth estimates for the January-March quarter are about a 2% annualised rate.

There were also declines in sales at furniture stores, health and personal care stores and electronics and appliance stores. The ProShares Decline of the Retl Store ETF (EMTY) is up 1.12% while the Proshares Long Online/Short Stores ETF (NYSE Ara: CLIX) is up 1.45%.

But there were some pockets of strength. Receipts at clothing stores gained 0.4 percent and sales at online retailers jumped 1.0 percent.

In a separate report, the Labour Department said a key measure of underlying producer price pressures that excludes food, energy and trade services rose 0.4% in February, matching January's gain. Excluding vehicles and fuel, sales rose by 0.3 per cent.

On the bright side, the core PPI score was up to 2.7 from 2.5 percent in January, which means that consumer inflation may pick up in 2018.

Building materials and garden supply stores were up 5.1 percent year-over-year and up 1.9 percent from January seasonally adjusted.

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