US April retail sales gain points to healthier Q2

(iStock)
(iStock)

US retail sales rose for a second month in April in broad fashion as bigger after-tax pay checks helped compensate for rising fuel costs, signalling consumer demand was off to a good start this quarter.

The value of sales increased 0.3%, matching the median forecast, after a 0.8% advance in the prior month that was stronger than initially reported, Commerce Department figures showed on Tuesday.

So-called retail-control group sales, which are used to calculate gross domestic product and exclude food services, auto dealers, building materials stores and gasoline stations, improved 0.4% after an upwardly revised 0.5% gain.

The results add to the expectation that consumer spending, the biggest part of the economy, will rebound from its first-quarter weak patch.

A strong job market and higher take-home pay in wake of tax reductions are buoying Americans' wherewithal to spend and cushioning the squeeze from costlier fuel that leaves people with less money to buy other goods and services.

Retail sales data for February were also revised up to unchanged from a previously estimated 0.1% decrease.

Nine of 13 major retail categories showed advances in April, led by the biggest jump in sales at apparel stores since March of last year. Increased receipts were also evident at furniture merchants, building-materials outlets, Internet retailers and department stores.

Filling-station receipts increased 0.8%, the most since January and reflecting a jump in gasoline costs that are now near the highest level since late 2014. That probably boosted retail sales as Commerce Department figures aren't adjusted for price changes.

Excluding automobiles and gasoline, retail sales also rose 0.3%, after an upwardly revised 0.4% gain in the previous month.

The Commerce Department’s retail report may help economists tweak their forecasts for how consumer spending began the second quarter after growing 1.1% in the first three months of 2018, a slowdown following three quarters of robust gains.

While consumer spending has remained solid in this expansion, business investment has also been posting strong growth in recent quarters. Tax cuts that President Donald Trump signed into law at the end of 2017 were seen as providing a further jolt to consumption and capital spending that would spur growth toward the president’s 3% goal.

Economists including those at Bank of America and JPMorgan Chase & Co have noted the recent runup in gasoline prices and said persistently higher fuel costs this year would risk eroding a sizeable portion of the tax benefits.

Demand for automobiles barely rose. Purchases at automobile dealers climbed 0.1% after increasing 2.1% in the previous month.

Other details

  • Receipts at clothing stores increased 1.4%; sales at furniture stores were up 0.8%.
  • Sales rose 0.2% at department stores and 0.3% at general merchandise outlets.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
16.84
(-0.22)
ZAR/GBP
21.14
(+0.34)
ZAR/EUR
19.11
(-0.55)
ZAR/AUD
11.69
(-0.12)
ZAR/JPY
0.16
(+0.06)
Gold
1804.11
(+0.23)
Silver
19.09
(+1.70)
Platinum
831.00
(+0.91)
Brent Crude
43.02
(0.00)
Palladium
1962.00
(+0.56)
All Share
56199.46
(+1.41)
Top 40
51874.81
(+1.41)
Financial 15
10703.82
(+2.21)
Industrial 25
76910.63
(+1.02)
Resource 10
53327.86
(+1.61)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 2003 votes
I am taking a hit, but should be able to recover in the next year
23% - 2621 votes
My finances have been devastated
35% - 3925 votes
It's still too early to know what the full effect will be
25% - 2809 votes
Vote