TheNigerianVoice Online Radio Center

April Retail Sales Hint At Slower Spending Pace

Listen to article

Sales at U.S. retailers barely rose in April as the boost from an unseasonably warm winter faded, pointing to some loss of momentum in consumer spending early in the second quarter.

But details of the report showed underlying strength in demand. That and other data on Tuesday showing a strong rebound in manufacturing activity in New York State this month and sentiment among home builders at a five year-high, calmed concerns the economy was stalling.

In addition, retreating gasoline prices, which put a lid on inflation pressures last month, should put more money in American's pockets and boost spending in the months ahead.

"The economy keeps rolling along," said Chris Rupkey, chief financial economist at Bank of Tokyo Mitsubishi UFJ in New York.

Retail sales edged up 0.1 percent in April, held back by a decline in receipts from building materials and clothing stores, the Commerce Department said on Tuesday. That was the smallest gain since December, when sales were flat.

Other data showed manufacturing remained resilient, with a gauge of factory activity in New York state bouncing higher this month as new orders and shipments rose.

The New York Federal Reserve said its Empire State general business conditions index jumped to 17.09 in May from 6.56 in April, outpacing economists' expectations of 8.50.

Separately, the National Association of Home Builders/Wells Fargo Housing Market index rose to 29 from 24 in April, topping economists' expectations for 26.

U.S. stocks were up modestly on Tuesday as news that Greece would hold a new election gave investors another reason to be cautious despite several days of equity losses.

Unusually warm weather pulled forward sales into January and February, resulting in first-quarter consumer spending rising at its fastest clip in more than a year.

Consumer spending increased at a 2.9 percent annual rate in the first three months of this year.

Sales last month were mixed, with building materials and gardening equipment falling 1.8 percent - the largest drop since January last year - after surging 2.7 percent in March.

Home Depot Inc also fell victim to the weather in April. The world's largest home improvement chain reported weaker-than-expected quarterly sales on Tuesday after demand slowed last month after earlier strength.

Auto sales increased 0.5 percent after rising 0.2 percent in March. Excluding automobiles, sales ticked up 0.1 percent after advancing 0.8 percent the prior month.

The payback from the warm weather was also evident in clothing stores sales, which dropped 0.7 percent after dipping 0.1 percent in March.

Clothing sales were also probably affected by an early Easter holiday, which brought forward spring purchases.

Sales at gasoline stations fell 0.3 percent as prices at the gasoline pump retreated from recent highs around $4 a gallon. Sales had increased 1.0 percent the prior month.

While the drop in gasoline prices contributed to holding back retail sales last month, this should boost spending in the months ahead by easing the burden on cash-strapped households.

In a separate report, the Labor Department said its Consumer Price Index was unchanged last month after rising 0.3 percent in March. Excluding food and energy, core CPI gained 0.2 percent, matching the increase posted in March.

So-called core retail sales, which exclude autos, gasoline and building materials, rose 0.3 percent after increasing 0.6 percent in March.

Core sales correspond most closely with the consumer spending component of the government's gross domestic product report and March's rise pointed to strength in underlying demand even though the pace slowed from the first quarter's brisk pace.

The economy grew at a 2.2 percent rate in the first quarter.

Sales at restaurants and bars rose 0.4 percent, while receipts at sporting goods, hobby, book and music stores increased 0.7 percent. Receipts at electronics and appliances retailers climbed 0.2 percent, while sales at furniture stores rose 0.7 percent.