The weaker-than-expected figures followed reports thisweek showing that price rises last month were modest. "There is no doubt the economy has come off the boil," David Bloom, US economist at James Capel, said.
The value of sales rose 0.2 per cent in March, taking their annual growth rate down to 3.8 per cent. Sales fell 1.0 per cent in February - more than double the previous estimate of the decline. The weakness of dollar takings implies a big fall in sales volumes over the past two months.
In March, new car sales were unchanged. They account for about a fifth of the total value of retail spending, but even excluding cars the sales increase was only 0.2 per cent. Non-durable goods were flat, and petrol sales fell.
The areas of spending that increased were furniture and building materials and clothing, but these were recovering after an extremely weak February. They were probably helped along by price discounting.
The one sign of strength in the US economy recently has been job creation. Separate figures on unemployment benefit claims published yesterday showed the number of claims fell to 338,000 last week, continuing the decline in joblessness. About 750,000 new jobs were created in America in the first three months of this year.
Financial markets reacted favourably to the latest confirmation of the economy's apparent soft landing. Elias Bikhazi, an analyst at Deutsche Bank Securities in New York, said: "Four important economic reports in a row say Alan Greenspan can stop raising rates." He said the Fed chairman could even consider easing policy later in the year.Reuse content