Weaker-than-expected US retail sales temper growth outlook
Retail sales, which account for a third of consumer spending, edge up by a meagre 0.1 per cent in April
A customer looks at Apple iPhone accessories at a Best Buy store in Northbrook, Illinois. Photograph: Tim Boyle/Bloomberg
US retail sales barely rose in April, tempering hopes of a sharp acceleration in economic growth in the second quarter.
The commerce department said today retail sales edged up 0.1 per cent last month, held back by declines in receipts at furniture, electronic and appliance stores, restaurants and bars and online retailers.
Retail sales, which account for a third of consumer spending, rose by a revised 1.5 per cent in March. That was the largest increase since March 2010 and reflected pent-up demand after a brutally cold winter.
“You really had a spectacular March. You are now having an April hangover ... The reality of the economy is decent but not great. Some people over-extrapolated the March numbers,” said Guy Berger, an economist at RBS in Stamford, Connecticut.
Economists had forecast sales advancing 0.4 per cent last month after a previously reported 1.2 per cent surge in March.
US Treasury debt prices rose on the data, while the dollar trimmed gains versus the euro. U.S. stocks were trading higher. Data such as employment, as well as manufacturing and services industries surveys had suggested the economy regained strength early in the second quarter.
Growth was held down to a 0.1 per cent annual rate in the first quarter by bad weather and a slow pace of restocking by businesses. However, growth is likely to be revised down to show a contraction.
A second report from the Commerce Department showed retail inventories excluding automobile stocks barely rising in March. The government had assumed a big increase in these stocks when it made its advance GDP growth estimates last month. March trade, construction spending and factory inventory data, which the government did not have in hand for the GDP estimate, have also suggested downward revisions to output.
In April, a gauge of consumer spending slipped and economists said the economy’s weak performance at the start of the year had probably made households more careful about spending. “It’s possible that consumers are being a bit more cautious in their spending habits as they await confirmation that the economy is, in fact, poised to reaccelerate,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.