USA retail sales in April recorded their biggest increase in a year as Americans stepped up purchases of automobiles and a range of other goods, suggesting the economy was regaining momentum after growth nearly stalled in the first quarter.
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Gasoline stations sales rose 2.2% month over month and are down 9.4% year over year, nearly entirely due to lower gasoline prices.
United States retail sales rose more than expected in April, driven by purchases of automobiles, the Commerce Department said on Friday.
Excluding automobile sales, April retail sales rose 0.8%. Online purchases advanced 2.1 percent.
Seasonally adjusted sales rose by 1.3% to $453.4 billion, compared with March 2016 sales of $447.8 billion, and rose 3% year over year.
Still, in many categories the gains just barely reversed the declines of March, and it was not clear how strong the rebound will be going ahead.
Economic growth braked to a 0.5% pace in the first three months of the year after expanding at a 1.4% pace in the fourth quarter.
Earlier this year, the NRF said it is calling for 2016 retail industry sales, excluding automobiles, gas stations, and restaurants, to see a 3.1 percent annual increase. It comes days after major retailers, including Macy’s (M.N) and Nordstrom (JWN.N), reported sales tumbled in the first quarter and lowered their full-year profit forecasts. The inventory-to-sales ratio for motor vehicles rose to 2.30 in March, the highest since April 2009.
The April performance follows retail sales in each of the first three months originally reported as being down or showing no improvement from the month before.
The rout in retail stocks has fueled worries about consumer spending and even the broader economy, which were outlined in detail today by my colleague Randy Forsyth in his column, “Up and Down Wall Street”.
“While a welcome step in the right direction following minimal activity January to March, even at 2.2%, the USA economy would average only 1.4% across the first half of the year, hardly an impressive showing”, said Lindsey Piegza, chief economist at Stifel Fixed Income. But the gain also raises optimism that consumers can power better growth this year. Economists had forecast a 1% increase.
Spending at nonstore retailers increased 2.1% in April, the best gain since June 2014.
The largest gains were recorded among lower income and younger households, although the gains were recorded among all income and age subgroups as well as across all regions, according to Surveys of Consumers Chief Economist Richard Curtin.
Sales at electronics and appliance outlets increased 0.5%.
“Nearly all of the gains were in the Expectations Index, which rose to its highest level in almost a year”.
Data on retail sales, construction spending and factory orders have already implied that the advance GDP growth estimate could be raised to a 0.9 percent rate when the government publishes its revision later this month.
Nordstrom reported that sales at stores open at least a year fell 1.7% in the first quarter.
Receipts at clothing stores surged 1.0 percent, the largest increase since May 2015. Receipts at sporting goods and hobby stores rose 0.2 percent last month.
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Only building materials stores suffered a monthly decline, though their annual sales growth was solid.
