Retail sales excluding autos decreased 0.4%, today’s report showed. They were projected to be little changed, according to the Bloomberg survey median.
The retail sales figures, which aren’t adjusted for prices, reflected less expensive gasoline. The average cost of a gallon of regular fuel at the pump dropped about 13 cents to end last month at $3.63, the first decrease in March since AAA, the biggest U.S. auto group, began keeping data in 2004. Filling- station receipts dropped 2.2% last month, according to the Commerce Department data.
The retail sales category used to calculate GDP, which excludes auto dealers, building-material stores and service stations, sales fell 0.2% after a 0.3% increase in the previous month.
March’s weaker sales data comes after demand strengthened at the end of 2012 and into this year. Consumer spending advanced at a 1.8% rate from October to December, according to Commerce Department data. It rose at a 3% rate from January to March, the most since the first quarter of 2011, according to median projection of economists surveyed by Bloomberg this month.
Sales held up even as taxes took more from Americans’ paychecks. Congress agreed to a fiscal pact on Jan. 1 that allowed the tax used to finance Social Security to revert to 6.2% from 4.2%.
“The payroll tax increase is hurting,” Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors Inc. in While Plains, New York, said in a note. “You should expect second- quarter consumption to rise at a much slower pace.” Shepherdon correctly projected the drop in sales.
Consumer spending will probably slow to a 1.8% pace from April through June, according to the Bloomberg survey of 59 economists taken from April 5 to April 9.
Payrolls grew by 88,000 last month, the smallest increase since June, the Labor Department said on April 5. Average hourly earnings were unchanged in March from the prior month, the weakest showing since October.
Recent reports have added to concern that across-the-board government budget cuts, known as sequestration, will impede progress made in the job market. Reductions in planned spending, which began March 1, trim 5% from domestic agencies and 8% for the Defense Department this fiscal year.
“Clearly the economy is still pressuring the consumer out there,” Ken Martindale, chief executive officer of drugstore chain Rite Aid Corp., said during an April 11 earnings call. “We’re sticking with our promotional program. We’d like to get less dependent on promotions.”
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