WASHINGTON — Americans pulled back on their spending at auto dealers and restaurants in March, causing retail sales to drop despite signs of a healthy job market.
Retail sales fell a seasonally adjusted 0.2 percent, the Commerce Department said Friday, after a revised 0.3 percent drop in February. But over the past 12 months, retail sales have risen 5.2 percent, a sign that that the economy remains on stable footing.
Still, there are signs that consumers are growing more cautious even though the unemployment rate declined in March to a low 4.5 percent. Steady job growth as the recovery from the Great Recession nears its eighth year and a bump in consumer sentiment following President Donald Trump's presidential election have yet to strengthen spending much.
Richard Moody, chief economist at Regions Financial, said the decline might reflect a natural retreat after strong consumer spending in the final three months of last year.
The improving job market and rising household net worth should keep the economy in solid shape, he suggested.
"None of those things point to a structural slowdown in consumer spending," Moody said.
Ian Shepherdson, an economist at Pantheon Macroeconomics, cautioned, though, that the retail sales figures are "impossible to square with the stratospheric levels of consumer confidence."
The divergence suggests either an acceleration in retail sales later this year or a decline in consumer confidence.
"We expect a bit of both," Shepherdson said.
Since the start of 2017, Americans have cut back on purchases at auto dealers and restaurants and bars, two major sources of sales gains in prior years. Sales tumbled 1.5 percent last month at auto dealers and 0.6 percent at restaurants and bars. It was the second straight monthly drop in sales for both categories.
Spending at building materials stores also fell in March. And sales were lower at gasoline stations, though that likely reflected lower energy prices rather than waning enthusiasm from consumers.
Some of last month's pullback in retail sales was offset by rising purchases at department stores, clothiers and electronics outlets. Still, sales at those businesses have been sluggish over the past year.
One bright spot has been online retailers, which continue to thrive. Sales at non-store retailers improved 0.6 percent in March and have surged 11.9 percent during the last 12 months. More consumers are migrating away from physical stores to online outlets.