US sees big fall in retail sales

Retail sales are a keenly watched measure of the US economy

Retail sales in the US fell by an unexpectedly large amount in February, the latest sign that the world's largest economy may be in trouble.

Retail sales fell by 0.6% last month compared with January, according to figures from the Commerce Department.

The data followed a 0.4% gain in January and a 0.7% fall in December as shops suffered a slow Christmas season.

Consumer spending is closely watched in the US because it accounts for about two-thirds of total economic activity.

"The slowdown that we know is happening in the banks has manifested itself on Main Street," said Joe Francomano from Erste Bank in New York.

"These economic numbers are going to get much worse and after the retail sales number, we saw the dollar trade lower," he added.

Analysts had been expecting a rise of 0.2% in retail sales.

There was some slightly better news from the Labor Department, which reported that the number of laid-off workers filing applications for unemployment benefits was unchanged in the last week at 353,000.

Separate Commerce Department data on Thursday showed an unexpected rise in inventories held by firms at the start of the year, as they failed to shift stock.

Inventories held by businesses rose by 0.8% in January, the most in nearly two years and more than the expected 0.5% rise.