INSTANT VIEW: Retail sales; producer prices fall in March

NEW YORK (Reuters) - U.S. producer prices fell unexpectedly in March and also notched the largest year-over-year decline since 1950 as energy prices slipped, government data on Tuesday showed.

Sales at U.S. retailers unexpectedly fell in March, snapping two months of increases, as motor vehicle and electronic good purchases declined, according to a government report on Tuesday that indicated subdued consumer spending amid rising unemployment.

KEY POINTS:

RETAIL SALES * The Commerce Department said total retail sales dropped 1.1 percent after rising by a revised 0.3 percent in February, previously reported as a 0.1 percent fall. * Excluding motor vehicles and parts, sales fell 0.9 percent in March, compared to a 1 percent gain the prior month. The data highlighted the continuing problems in the U.S. auto industry, with vehicle and parts sales dropping 2.3 percent after a 3 percent decline in February.

PPI * The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate fell by 1.2 percent last month versus a 0.1 percent gain in February. * Analysts polled by Reuters had forecast producer prices would be unchanged in March.

COMMENTS:

ROGER KUBARYCH, ECONOMIST, UNICREDIT MARKETS, NEW YORK:

"The retail sales numbers are terrible... I am really surprised by the auto component. The auto numbers coming out of the companies were really strong but these are mediocre. How come?"

TOM SOWANICK, CHIEF INVESTMENT OFFICER, CLEARBROOK FINANCIAL, PRINCETON, NEW JERSEY:

"I think the way you have to look at retail sales is that January and February were strong, but March looks like a "give back" month. The first two months of the year could have been because of the use of gift cards. Remember, Easter also started later this year... last year it was March 23, so I wouldn't put too much into this number. Tax checks went out April 1 so you are looking for stimulus coming out."

JOHN LONSKI, CHIEF ECONOMIST, MOODY'S INVESTORS SERVICE:

"Retail sales broke sharply from the ranks of what had been a parade of good economic news. I think this serves as a reminder that the recession is still here and that rising unemployment, declining income as well as a deep plunge by household net worth will adversely affect retail sales indefinitely. That being said, we did have the annualized sales rate for cars and light trucks rise by more than 8 percent from February to March, and moreover the anecdotal evidence still suggests that consumer spending firms."

OMER ESINER, US MARKET ANALYST, RUESCH INTERNATIONAL, WASHINGTON:

"This morning's US data came well below expectations and doused the positive sentiment in the markets in the past couple of weeks. The data shows that expectations that the U.S. economy has bottomed were overdone and it is not surprise to see dollar/yen trading much lower after the release. The reports reintroduced some risk."

DOUG BENDER, MANAGING DIRECTOR, MCQUEEN, BALL & ASSOCIATES, BETHLEHEM, PENNSYLVANIA:

"Retail sales are clearly weaker than expected. Treasuries I think are just in a trading range. With a little less supply this week and the Fed buying, Treasuries can probably hold in there."