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Weak US retail sales in April point to slowing economy

Weak US retail sales in April point to slowing economy

Reuters
WASHINGTON
US retail sales unexpectedly fell in April as households cut back on purchases of motor vehicles and a range of other goods, pointing to a slowdown in economic growth after a temporary boost from exports and inventories in the first quarter.
The economy’s outlook was also dimmed by other data on Wednesday showing a decline in industrial production last month. The weak reports came in the midst of an escalating trade war between the United States and China, which has triggered a massive stock market sell-off.
Economists have warned the trade tensions could undercut growth. Following the retail sales report, some economists trimmed their second-quarter growth estimates.
The Commerce Department said retail sales slipped 0.2 percent last month. Data for March was revised slightly up to show retail sales surging 1.7 percent, the largest increase since September 2017, instead of the previously reported 1.6 percent jump.
Economists polled by Reuters had forecast retail sales gaining 0.2 percent in April. Retail sales in April increased 3.1 percent from a year ago.
US financial markets were little moved by the data.
Excluding automobiles, gasoline, building materials and food services, retail sales were unchanged in April after an upwardly revised 1.1 percent acceleration in March. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
They were previously reported to have soared 1.0 percent in March. Consumer spending accounts for more than two-thirds of economic activity. While March’s strong core retail sales set consumer spending on an upward trajectory in the second quarter, last month’s weakness suggested the pickup in consumption could be moderate.
Morgan Stanley cut its consumer spending growth estimate for the second quartet to a 1.6 percent annualized rate from a 2.0 percent pace. The bank lowered its second-quarter GDP growth estimate to a 1.2 percent rate from a 1.5 percent pace.
Consumer spending grew at a 1.2 percent annualized rate in the first quarter, the slowest in a year. The economy grew at a 3.2 percent pace in the January-March quarter. The economy is losing momentum in part as the boost from last year’s $1.5 trillion tax cut package fades.
In April, sales at auto dealerships dropped 1.1 percent after accelerating 3.2 percent in the prior month. Online and mail-order retail sales dropped 0.2 percent last month.
Sales at building materials and garden equipment and supplies dealers tumbled 1.9 percent. Receipts at clothing stores slipped 0.2 percent, likely reflecting deep price discounting by retailers trying to work off excess inventory. Households also spent less on personal grooming.

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