From Bob Willis and Shobhana Chandra at Bloomberg:
Retail sales in the U.S. unexpectedly dropped in March for the first time in three months, raising concern the biggest part of the economy may falter once again heading into the second quarter.
Purchases fell 1.1 percent, with declines from car dealers to electronics stores and restaurants, the Commerce Department said in Washington. Only pharmacies and grocery stores saw a gain. The Labor Department said wholesale prices fell last month, indicating that deflation risks remain.
The figures served to temper optimism the U.S. recession has passed its worst, pushing down shares of retailers including Home Depot Inc. and Macy’s Inc. The reports came even as Federal Reserve Chairman Ben S. Bernanke said there were “tentative signs that the sharp decline” in the economy was easing, citing “progress” in stabilizing financial markets, which he said was critical to a sustainable recovery.
“The job losses are too great for the consumer to spring back strongly,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Today’s data is a stark reminder that we haven’t yet seen the bottom in this recession.”
Stocks slid, with the Standard & Poor’s 500 Retailing Index losing 1.6 percent as of 11:40 a.m. in New York, and the broader S&P 500 index down 0.8 percent at 851.56. Benchmark 10-year Treasuries gained, sending their yields down to 2.79 percent from 2.86 percent late yesterday. . . .
The retail sales figures indicated incentives and promotions by car dealers and clothing stores such as Gap Inc. failed to draw customers hurt by a lack of credit and the highest unemployment rate in more than 25 years.
Excluding automobiles, sales decreased 0.9 percent after a 1 percent gain in February. They were forecast to show no change, according to the survey median.
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