Us retail sales point to weakness in US economy; Fed to stay pat

 "The economy's engines are not going into reverse … but at the moment, it is hard to see GDP with a 2 percent handle. Based on today's lackluster sales report, policymakers will be in no hurry to raise interest rates" – MUFG Union Bank 

Americans are showing renewed signs of caution due to ongoing financial-market turbulence, as retail sales declined last month and January's increase was revised to a drop. According to the Commerce Department, retail sales fell 0.1% in February to a seasonally adjusted $447.31 billion as automobile purchases decreased and cheaper gasoline lowered receipts at service stations. Moreover, January's figure was revised down to a 0.4% decline from the 0.2% gain previously reported.
Core retail sales, which correspond most closely with the consumer spending component of GDP, were unchanged in February.

The data could give the US central bank more reason to maintain interest rates on hold on Wednesday, when the Fed is due to release its latest policy statement.

Following the data release, economists lowered their first-quarter GDP growth estimates by a percentage point to as low as a 1.9% rate. Retail sales are a key indicator of overall consumer spending, which makes up for about two-thirds of the US economic output. Still consumer spending remains buoyed by an improving labour market and rising house prices.  

A separate report showed the producer price index declined 0.2% in February on lower energy and food costs, after climbing 0.1% in January. Measured on an annual basis, the reading remained unchanged after sliding 0.2% in January

Source: Dukascopy Bank SA