US retail sales missed expectations in April
WASHINGTON, United States — Retail sales in the United States were flat in April, government data showed Wednesday, despite analyst expectations that they would continue growing and is a sign that consumer spending is cooling.
Overall sales held steady from March at a revised $705.2 billion, said the Commerce Department in a report. Analysts expected a 0.4 percent jump, according to Briefing.com.
While sales at gas stations were up 3.1 percent from March to April, the broader figure was bogged down by a slump in motor vehicle and parts dealers.
From a year ago, retail sales were 3.0 percent higher.
Economists have been expecting demand to cool this year as interest rates remain high, while households draw down on accumulated savings from the Covid-19 pandemic.
READ: Retail sales surged 0.7% in March as Americans boosted spending
Article continues after this advertisement“The accelerated shift towards online retail has turbo-charged nonstore sales over the past few years, but the size of last month’s jump is hard to explain and looks unsustainable,” said analysts at Pantheon Macroeconomics in a recent note.
Article continues after this advertisement“We expect a softish retail sales report in April, supporting the idea that consumers are starting to tire,” the report added.
Cooling, not ‘collapsing’
Economists have warned that retail numbers are often revised heavily as well.
Generally, consumption growth is anticipated to slow further in the second quarter.
READ: A look at U.S. consumer prices in March, by the numbers
“Consumer spending is slowing as elevated interest rates weigh on rate-sensitive spending and as the labor market cools,” said Oxford Economics deputy chief US economist Michael Pearce.
But he said the jobs market is “cooling rather than collapsing,” meaning the slowdown will be gradual.
The economy’s resilience allows the Federal Reserve to also focus on incoming inflation data in its interest rate decisions, pointing to a gradual start to rate cuts in September, Pearce said.
While momentum in household spending has cooled in the first quarter, economist Rubeela Farooqi of High Frequency Economics said “the data signal that spending continues to be positive and remains supportive of growth for now.”
