The Commerce Department said on Tuesday retail sales edged up 0.1
percent last month, held back by declines in receipts at furniture,
electronic and appliance stores, restaurants and bars and online
"The consumers are catching their breath after a rebound from the
winter freeze, but we do remain on track to see stronger consumer
spending ... through the remainder of this year," said Robert Dye,
chief economist at Comerica in Dallas.
Retail sales, which account for a third of consumer spending, rose
1.5 percent in March, the biggest gain in four years. That followed
a healthy increase in February and reflected the release of pent-up
demand after a brutally cold start to the winter.
Economists, who had forecast sales advancing 0.4 percent last month,
said a late Easter could have caused difficulties smoothing the data
for seasonal fluctuations, causing the sharp swing from March to
Prices for U.S. Treasury debt rose on the data, while the dollar
gained against a basket of currencies. U.S. stocks rose marginally,
with the Dow Jones industrial average and Standard & Poor's 500
index both inching to record levels.
Data such as employment as well as manufacturing and services
industries surveys have suggested the economy regained strength
early in the second quarter. Growth was held down to a 0.1 percent
annual rate in the first quarter by bad weather and a slow pace of
restocking by businesses.
However, output will likely be revised down to show a contraction. A
second report from the Commerce Department showed retail inventories
excluding auto stocks barely rising in March.
The government had assumed a big increase in these stocks when it
made its advance GDP growth estimates last month. March trade,
construction spending and factory inventory data, which the
government did not have in hand for the GDP estimate, have also
suggested downward revisions to output.
But growth is expected to top a 3 percent rate this quarter.
While a gauge of consumer spending slipped in April, economists said
the weak growth performance at the start of the year had probably
made households more careful about spending.
"It's possible that consumers are being a bit more cautious in their
spending habits as they await confirmation that the economy is, in
fact, poised to reaccelerate," said Jim Baird, chief investment
officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.
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So-called core sales, which strip out automobiles, gasoline,
building materials and food services and correspond most closely
with the consumer spending component of GDP, dipped 0.1 percent in
That followed a 1.3 percent advance in March. Still, economists were
largely unframed by the drop and said consumer spending was on track
to post a third consecutive quarter of robust growth, citing a
firming labor market.
"Despite an overall seemingly weak April retail sales report, thanks
to the pop in March, the second quarter is starting off at a higher
level that is consistent with strong consumption in the quarter,"
said Bricklin Dwyer, an economist at BNP Paribas in New York.
In a separate report, the Labor Department said import prices fell
0.4 percent last month after rising 0.4 percent in March. In the 12
months through April, import prices fell 0.3 percent.
Weak import prices are helping to keep inflation muted. The lack of
inflation pressures in the economy suggests the Federal Reserve
could keep monetary policy very accommodative for a while even as
labor market slack starts to ease.
The U.S. central bank slashed overnight interest rates to a record
low of zero to 0.25 percent in December 2008 and pledged to keep
them low while nursing the economy back to health. The Fed is
scaling back the amount of money it is injecting into the economy
through monthly bond purchases.
While declines in receipts at electronics and appliance stores,
furniture outlets and food services and drinking places restrained
sales last month, sales at auto dealerships rose.
There were also increases in sales at building materials and garden
equipment and supplies dealers, clothing stores and sporting goods
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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