US. shoppers sat on their wallets in April despite the lure of warm spring weather and the late Easter holiday, leaving retail sales stagnant as other economic indicators improved.
A gauge of retail sales ticked up 0.1% last month from the month before, according to the Commerce Department. The tally was flat when a volatile measure of motor vehicle and parts receipts was stripped from the equation.
Analysts, cheered by recent signs of vigor from employers, had expected a 0.4% increase in retail sales.
After two months of back-to-back strength, the consumer appears to have lost momentum as we head into the second quarter. – Lindsey Piegza, chief economist at Sterne Agee
“After two months of back-to-back strength, the consumer appears to have lost momentum as we head into the second quarter,” Lindsey Piegza, chief economist at Sterne Agee, said in a note to clients.
Americans seem to have quickly satisfied their pent-up demand for goods after a harsh winter in which the average family spent an extra $600 to stay warm while also setting aside funds to enroll in healthcare.
“It certainly undermines some of the optimism out in the marketplace,” Piegza said of the Tuesday report.
Earlier this month, the labor market produced the most new jobs in two years, according to the government. The unemployment rate fell to 6.3% — its lowest level in more than 51/2 years.
The Institute for Supply Management said the service sector grew last month at its fastest pace since summer. Consumer confidence is near a six-year high.
Retail sales are considered a bellwether of consumer spending, which makes up two-thirds or more of U.S. economic activity. In April, the measure was up 4% from the same month in 2013.
For March, the government revised its measure of overall retail sales to a 1.5% increasefrom a previously reported 1.2%, marking the largest escalation since March 2010.
Month to month, some sectors showed strength. Clothing store sales rose 1.2%, while receipts at building materials and garden equipment vendors swelled 0.4% — a typical bump as higher temperatures encourage more home improvement projects.
But “the transition towards warmer weather remained choppy,” according to a report last week from Euclid, which analyzes in-store metrics. Shopper traffic slumped 10% in April from the year before, while repeat visits also declined, the group said.
The government’s figures on Tuesday showed a deep 2.3% slide in sales at electronics and appliance stores from March. Furniture merchants suffered a 0.6% slip. Non-store retailers, which include the recently strong e-commerce segment, dropped 0.9%.
Sales at gas stations were up 0.8%, suggesting that consumers were paying more at the pump as fuel prices steadily inched up.
Matthew Shay, chief executive of the National Retail Federation, said in a statement that he hopes the “uninspiring” figures “are just a temporary seasonal fluctuation.”
“The shift in Easter to April did not provide enough bounce to retailers as retail sales struggled to keep their strong spring pace,” he said.
The results tempered Wall Street’s expectations for gross domestic product growth in the second quarter. Credit Suisse said it may adjust its projection for a 4% increase.
Still, the retail sales gauge seems to have recovered from the frigid weather that swept through the country during the holiday season and at the beginning of the year.
“Smoothing through some of the monthly noise, momentum in retail sales looks respectable — essentially back to where it was prior to the winter chill,” according to the Credit Suisse report.
Also Tuesday, the International Council of Shopping Centers said that spending during the week ended May 10 was down 0.1% from the previous week but surged 3.9% from a year earlier — the strongest gain in nearly a year.
“Temperatures turned milder in some parts of the country, which helped drive seasonal demand — especially in the South and ahead of Mother’s Day,” said Michael Niemira, the group’s chief economist.