Retail sales increased 0.1 percent in April after March’s increase was upwardly revised to 1.5 percent.Revisions to March’s numbers were across the board. April’s control group retail sales were down 0.1 percent.
Retail Sales Moderate in April
After ending the first quarter of the year with a bang, retail sales moderated a bit in April even though the moderation was due to the fact that March’s retail sales numbers were revised up considerably, which makes it difficult to maintain the same strong pace of spending in April. Overall, retail sales increased 0.1 percent versus a consensus expectation of 0.4 percent. Again, the basic difference between expectations and the actual release was the strong revision for March’s growth, which was originally reported at 1.1 percent and has now been upwardly-revised to 1.5 percent. Meanwhile, retail sales excluding automobile sales came in flat for the month, partially because it was revised up to 1.0 percent from 0.7 percent in March. Retail sales excluding autos and gasoline sales were reported at -0.1 percent after being revised up in March to 1.4 percent from 1.0 percent.
Perhaps the biggest disappointment was the -0.1 percent reading for control group retail sales, which include the sectors that are used to estimate GDP. Having said this, control group retail sales were also revised up to 1.3 percent from an originally-reported growth rate of 0.8 percent in March, which makes the negative reading in April not as bad, only relatively weak, compared to what markets were expecting.
One of the key causes of weakness in April’s retail result corresponded to furniture and home furniture stores whose sales dropped 0.6 percent, which is not surprising given the recent weakness observed in the housing market. Sales at electronics and appliance stores plunged 2.3 percent and are down 1.5 percent versus April of 2013. We also saw a 2.3 percent drop in sales of miscellaneous store retailers, as well as a drop of 0.9 percent for both non-store retailers and food services & drinking places.
The rest of the retail sectors were positive and some of them even relatively strong. Such was the case of motor vehicle & parts dealers whose sales increased 0.6 percent and are up 9.8 percent versus April of 2013. Building material and garden equipment & supplies dealers posted growth rate of 0.4 percent, while food & beverage stores posted an increase of 0.3 percent. Health & personal care stores increased 0.6 percent, gasoline stations were up 0.8 percent, clothing stores were up 1.2 percent and sporting goods stores were up 0.7 percent.
Retail Sales Means a Moderate Start to the 2nd Quarter
Although the first quarter ended with a bang, the second quarter started with a moderate performance by the U.S. consumer. Still, we are not giving up and believe that consumer demand will remain strong in the second quarter of the year which should help, particularly for services, the overall performance of the U.S. economy.
Wells Fargo