WASHINGTON: US retail sales fell more than expected in March as consumers cut back on purchases of motor vehicles and other big-ticket items, suggesting that the economy was losing steam at the end of the first quarter because of higher interest rates.

Ebbing demand for goods is undercutting production at factories, with other data on Friday showing manufacturing production declining last month.

Still, the economy is not slowing fast enough to stop the Federal Reserve from raising rates one more time in May, before an anticipated pause in June in the US central bank’s fastest monetary policy tightening cycle since the 1980s.

“American consumers are pulling back, but it’s unclear how much of the fade is normal payback from an earlier binge and how much is underlying weakness,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “We suspect the headwinds are starting to dominate, and still look for a mild contraction in both spending and the economy through mid-year.” Retail sales dropped 1.0% last month, the Commerce Department said. Data for February was revised up to show retail sales falling 0.2% instead of 0.4% as previously reported. Economists polled by Reuters had forecast sales slipping 0.4%. They increased 2.9% year-on-year in March.

Retail sales are mostly goods, which are typically bought on credit, and are not adjusted for inflation. The second straight monthly decrease followed a sharp surge in January.

The decline in retail sales was almost across the board. Receipts at auto dealers dropped 1.6% after falling 1.3% in February. Furniture store sales fell 1.2%, while receipts at electronics and appliance stores tumbled 2.1%. Sales at building material and garden equipment supplies dealers plummeted 2.1%.

Receipts at clothing outlets dropped 1.7%. Lower gasoline prices depressed sales at service stations, which plunged 5.5%.

But online retail sales jumped 1.9%, while receipts at sporting goods, hobby, musical instrument and book stores gained 0.2%.