Falling US retail sales spark concern after January revised down

US retail sales fell by less than expected in February and, coming as January's data was revised down into negative territory, economists said this added another reason for the Federal Reserve to hold off from raising interest rates.

Sales fell 0.1% month-on-month to $447.3bn in February, the US Census Bureau said on Tuesday, the first drop since September. The decline was not as bad as the 0.2% consensus forecast, however.

On an annual basis sales were up 2.9%.

But January's sales data was revised markedly down to a 0.4% fall, having been initially published as a 0.2% rise.

Retail sales in February excluding automobiles was down 0.1%, versus a predicted 0.2% fall and a revised 0.4% decline from the month before. January's figure was revised down from a 0.1% increase.

Core sales, which exclude such categories as autos, gasoline stations and building materials and will feed into gross domestic product calculations, were flat in February after January's number was revised down to a weak 0.2% increase, having first been recorded as a robust 0.6% gain.

Retail trade sales were down 0.3% from January and up 2.7% on a yearly basis.

Notable sub-sector moves on an annual basis, were a 12.% rise in building material and garden supplies and a 15.6% slide in sales from gas stations compared to last year.

“A weaker than previously thought retail sales trend so far this year puts further pressure on US policymakers to hold off hiking interest rates," said economist Chris Williamson at Markit.

He noted that after rising 1.1% in the third quarter and 0.3% in the fourth quarter, US retail sales were running on average 0.2% lower so far in the first quarter compared to the final quarter of last year.

“These data will inevitably lead to a raft of downward revisions to analysts’ predictions for first quarter GDP growth. The weaker than expected picture will also add to suspicions that Fed officials, about to gather for their March policy meeting, will no doubt also err towards caution and avoid hiking interest rates again until the economy shows signs of renewed resilience."