WASHINGTON — Sales at U.S. retailers fell in March from February, indicating that higher taxes and weak hiring likely made some consumers more cautious about spending.
Retail sales declined a seasonally adjusted 0.4 percent last month, the Commerce Department said Friday. That followed a 1 percent gain in February and a 0.1 percent decline in January. Both February and January figures were revised lower.
The retail sales report is the government’s first look at consumer spending, which drives about 70 percent of economic activity.
Companies are also less optimistic about the next few months, according to a separate Commerce report issued Friday. Businesses increased their stockpiles only 0.1 percent in February, the smallest gain in eight months. That suggests companies had expected sales to weaken this spring, a point confirmed by the March retail sales figures.
Economists said restocking will likely stay tepid in the April-June quarter. Slower restocking means companies will order fewer goods, slowing factory output and growth.
The decline in March shows higher Social Security taxes are starting to affect consumers and could dampen growth in the spring.
Many economists still predict economic growth accelerated to an annual rate of roughly 3 percent in the January-March quarter. That would be a significant increase from the anemic growth rate of 0.4 percent reported for the October-December quarter.
Still, economists say the improvement is likely temporary. Many now expect weaker spending will be among factors that slow growth again in the April-June quarter, to an annual rate of around 1.5 percent.
“The U.S. consumer looks a little less resilient,” said Michael Feroli, an economist at JPMorgan Chase. “It now appears that close to $200 billion in higher taxes may have actually had some impact on consumer spending.”
A separate report Friday on April consumer confidence seemed to bolster that point.
The University of Michigan’s preliminary survey of consumer sentiment fell to 72.3. That’s down from 78.6 in March and the lowest since July. The discouraging jobs report and other weak economic reports weighed on consumers’ minds.
Consumers cut back across a wide range of categories last month. Sales at auto dealers dropped 0.6 percent. Gas station sales dropped 2.2 percent, partly reflecting lower prices. The retail figures aren’t adjusted for price changes.
Excluding the volatile categories of autos, gas and building materials, core sales dropped 0.2 percent in March. That followed a gain of 0.3 percent in February. Department stores, electronics retailers and sporting goods outlets all reported lower sales.
“The economy appears to have lost some momentum,” Paul Dales, an economist at Capital Economics, said. “But with gasoline prices now falling, we don’t expect too sharp a slowdown.”
The cost of a gallon of gas averaged $3.56 nationwide Thursday, down from $3.70 a month earlier.
A measure of wholesale prices fell by the largest amount in 10 months in March, reflecting a big drop gasoline prices, the Labor Department reported. Its producer price index fell 0.6 percent in March compared with February. In February, wholesale prices had jumped 0.7 percent.
The March decline reflected a 6.8 percent plunge in gas prices, the sharpest drop since November. Overall energy prices fell 3.4 percent, the biggest decline in three years. Food prices posted a 0.8 percent rise in March.
Core inflation, which excludes volatile food and energy prices, rose 0.2 percent in March. Wholesale and retail inflation have remained mild, apart from sharp swings in gas prices.