April Retail Sales Slowed, Missing Estimates

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retailsalesWashington—After a strong March showing, economists believed retail sales were poised for a rebound. But in its monthly report, the U.S. Department of Commerce today reported total retail sales only edged up 0.1% to $434.6 billion, falling short of a 0.4% increase economists had predicted.

The figure was disappointing considering that in March, retail sales—which account for a third of all consumer spending—had risen 1.5%, the biggest monthly gain in four years.

Taking a look at the so-called core sales, excluding automobiles, gasoline, building materials and food services and which correspond most closely with the consumer spending component of GDP, were down 0.1% in April.

‘A Positive Trajectory’

Still, many economists remained unfazed by the drop, noting that consumer spending is on course to post a third consecutive quarter of growth along with lower unemployment.

“The consumers are catching their breath after a rebound from the winter freeze, but we do remain on track to see stronger consumer spending…through the remainder of this year,” said Robert Dye, chief economist at Comerica.

“Despite an overall seemingly weak April retail sales report, thanks to the pop in March, the second quarter is starting off at a higher level that is consistent with strong consumption in the quarter,” said Bricklin Dwyer, an economist at BNP Paribas in New York.

“Even though retail sales were weaker than anticipated, the fundamentals of the economy, including improving job growth and income gains, remain positive,” NRF Chief Economist Jack Kleinhenz said. “While the shift in Easter played into the seasonal figures, NRF remains optimistic that retail sales will keep their positive trajectory, albeit in fits-and-starts, in the second quarter.”

By retail type, furniture/home stores, electronics/appliances, food services and miscellaneous store retailers had sales decreases in April, but other categories were up, including clothing and clothing accessories retailers that posted a 1.2% increase from March and a 1.1% increase from April 2013.

General merchandise retailers were up 0.2% with department stores reporting a 1.8% increase from April (a 0.3% decline from April 2013).

Nonstore retailers, which include online, were down 0.9% in April but were still up 6.5% from April 2013.

Because of the Easter shift, some economists said a look at March and April figures is a more accurate depiction.

February and March figures were revised up by a net 0.4%, a combination that seems more optimistic.

“Looking through the volatility of the last five months, the average monthly gain in retail sales from December 2013 to April 2014 was +0.3%, exactly the same as the average monthly gain recorded from January to November 2013,” said RBS Securities in a note today.

“You’ve got to view March and April together because either one alone is misleading,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. “Spending is growing pretty modestly. It’s going to take significantly stronger job growth for an acceleration.”