Retail sales unchanged in April

No budge from March’s tally despite warmer weather

Shoppers browse at a store in the Bayside Marketplace in downtown Miami on May 6. The Commerce Department said Wednesday that retail sales were unchanged in April compared with March.
Shoppers browse at a store in the Bayside Marketplace in downtown Miami on May 6. The Commerce Department said Wednesday that retail sales were unchanged in April compared with March.

WASHINGTON -- U.S. consumers stayed away from shopping in April despite warmer weather and Easter , leaving retail sales stagnant.

Retail sales were flat last month compared with March, the Commerce Department said Wednesday. That was below analyst predictions of 0.2 percent growth.

Sales have risen just 0.9 percent over the past 12 months. Steady hiring has yet to spark significantly higher incomes.

Consumers have been using the windfall from cheaper gasoline to add to their savings as wages have been slow to pick up, which may temper the projected rebound in U.S. growth this quarter. At the same time, steady hiring and low borrowing costs will underpin household spending, which accounts for about 70 percent of the economy.

"It's certainly is a disappointing report," said Guy Berger, an economist at RBS Securities Inc. in Stamford, Conn. "We are going to need to see some of these categories that were weak in April firm up in May and June."

Absent that, "there'll be some head-scratching that the economy is not coming back as strong as expected," he said.

The retail sales report also raises the possibility that nasty winter weather can't entirely explain the lackluster consumer spending in prior months.

"The continuing weakness of retail sales in April brings into question our working assumption that the soft patch through the winter months was largely due to the unseasonably cold temperatures in the Northeast," said Paul Ashworth, chief U.S. economist at Capital Economics.

Seven of 13 major retail categories showed gains, led by restaurants and bars and online merchants, the report showed. A tiny advance among miscellaneous stores tipped the balance in favor of gainers.

The downbeat report was reinforced by declines among discretionary items such as automobiles, furniture and electronics. Demand at grocery stores, service stations and general merchandise retailers also declined. The latter category includes department stores, which saw their biggest drop in purchases since January 2014, when snow blanketed much of the U.S.

Sales declined 0.4 percent at automobile dealers after jumping 2.9 percent the previous month.

Industry data from Ward's Automotive Group issued earlier this month showed cars and light trucks sold at a 16.5 million annualized rate in April, down from 17 million the prior month.

General Motors' April sales exceeded projections, while gains at Ford, Toyota and Nissan were less than predicted. With gasoline prices down by almost a third from a year ago, demand for large and luxury sport utility vehicles is soaring.

Retail sales excluding autos increased 0.1 percent, the Commerce Department report showed. Such sales were projected to rise 0.5 percent, according to the Bloomberg survey median. It followed a 0.7 percent advance in March that was larger than previously estimated.

The figures used to calculate gross domestic product, which exclude categories such as food services, auto dealers, home-improvement stores and service stations, were little changed after a 0.5 percent increase in them in the previous month, in the so-called control group, that was larger than previously estimated.

The upward revisions to most of those categories for March were a saving grace for the otherwise disappointing figures for April and indicate that consumer spending in the first quarter will be stronger than previously estimated.

Unusually harsh winter weather was blamed for some of the slowdown in retail sales in the early part of 2015, when delays related to a West Coast port dispute also held back other economic activity. The economy barely grew in the first quarter, with GDP advancing at a 0.2 percent annualized rate.

Household consumption expanded 1.9 percent in the January through March period, according to Commerce Department data issued last month.

Economists may mark down estimates for the current quarter after the retail sales figures. Consumer spending was projected to accelerate to 3.5 percent in the April through June period, according to the median forecast of economists surveyed by Bloomberg in April.

Since it's still early in the quarter, some economists are more sanguine.

"It's too early to add up the quarter based on one disappointing number," Jim O'Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, N.Y., said before the report. "The job market is improving. Wage income is growing. Wealth has been generally rising; that's a plus on top of wage income growth."

First-quarter results showed the saving rate climbed to 5.5 percent, the highest since the end of 2012. Disposable income adjusted for inflation rose at a 6.2 percent annualized rate, the most in more than two years, according to the Commerce Department figures.

The labor market continues to provide the wherewithal for Americans to spend. Payrolls bounced back in April with a 223,000 increase after an 85,000 gain the prior month, and the unemployment rate fell to 5.4 percent, the lowest since May 2008, according to Labor Department data.

Wage gains remain steady at relatively low levels. Hourly pay was up 2.2 percent in April from a year earlier, holding within the narrow range tracked over the past four years.

Information for this article was contributed by Shobhana Chandra and Chris Middleton of Bloomberg News, Josh Boak of The Associated Press and Shan Li of the Los Angeles Times.

Business on 05/14/2015

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