A spending slowdown in the first three months of the year was partly responsible for economic growth almost stalling, climbing at just a 0.5% seasonally adjusted annual rate.
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According to the Wall Street Journal, the sales surge was led by three categories: autos, gasoline stations and nonstore retailers, the latter being a segment that includes online shopping at sites such as Amazon.
Analysts had expected a 0.8% rebound from March. (NYSE:JWN), a fashion specialty retailer in the United States, said that its sales fell 1.7% in the first quarter, and would lower its profit expectation from $3.10-$3.35 to $2.50-$2.70 per share. It assuaged concerns that an economic slowdown in the first three months of 2016 might have significantly disrupted consumer spending.
Retail sales are important because it’s estimated to account for about two-thirds of all USA economic activity. The Bloomberg Dollar Spot Index, which tracks the currency versus 10 major peers, is set to complete a two-week advance of 2 percent, the biggest jump for such a period in nearly a year.
The March increases ended months of falling sales and inventories. Several major retailers reported soft sales in the first quarter.
Even though retail sales activity saw gains in April, that has not been fully reflected in the freight transportation and logistics sectors, which remain hampered by low demand and declining volumes to a large degree. Some economists blamed market volatility early in the year. The dollar received a second boost after the University of Michigan’s consumer sentiment index rose to 95.8 this month, the highest level since June 2015, from April’s reading of 89. United States stocks were trading lower. Sales at restaurants and bars rose 0.3 percent.
Consumers remain the primary driver of the USA economy, accounting for more than two-thirds of economic output.
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Inventories held by US businesses grew by 0.4% month-on-month in March to reach $1.82trn, according to the US Department of Commerce. This is something not helped by the increase in the cost of gas which, although still lower than a year ago, has risen consistently for the past few months. Economists had forecast a 1% increase. Receipts at service stations increased 2.2 per cent, reflecting recent increases in gasoline prices. Clothing and accessories stores reported a 1% jump. Building materials and garden equipment store receipts, however, fell 1.0 percent last month, the largest decline since August.
