WASHINGTON — Maybe retailers have some hope after all.
A string of dismal first-quarter results this week from leading retailers Macy’s Inc., Kohl’s Inc., J.C. Penney Co. Inc. and Nordstrom Inc. have exacerbated fears that consumers have basically given up on shopping in favor of experiences, like eating out.
But while the first quarter overall may have been awful, the U.S. Commerce Department may have provided some good news about the second quarter on Friday when it released data that showed a strong uptick in retail sales in April at both bricks-and-mortar stores and online.
Specialty stores led the pack but department stores also posted a modest sales gain. The non-store retail category, primarily consisting of e-commerce sales, soared in April, posting its strongest increase since June 2014, according to Moody’s Analytics.
Apparel and accessories store sales increased a seasonally adjusted 1 percent in sales to $21.4 billion last month compared to March. Department stores, a subset within the general merchandise category, posted a 0.3 percent increase in sales to $13.3 billion while sales in the broader general merchandise store category, which also includes discounters, were flat at $55.9 billion.
“Today’s retail sales data suggests that consumer activity — the primary driver of economic activity — has not lost its momentum,” said Jack Kleinhenz, chief economist at the National Retail Federation. “This sets the stage for an upturn in economic growth in the second quarter and should be encouraging for the Federal Reserve policymakers as they contemplate interest rate adjustments.”
With the exception of setbacks in building stores and general merchandise sectors, monthly gains were broad-based including nonstore, apparel and furniture, he said.
“This is reflective of growth in a volatile and disrupted retail industry, where consumer engagement is evolving to reflect both new economic and changing market realities,” said Kleinhenz.
Retail sales in the overall economy rose 1.3 percent to $453.4 billion in April, far exceeding economists’ expectations.
“In April, consumers came out swinging and opened their wallets on most retail goods such as autos, furniture, electronics, clothing, sporting, grocery, restaurants and many discretionary items,” said Chris G. Christopher, Jr., director of consumer economics at IHS Global Insight. “The lackluster growth in retail sales in the first quarter was a result of a sudden rush in the direction of cautious behavior due to concerns over the stock market. As the stock market made a return, consumers came back with a vengeance.”
Christopher said clothing sales were “off the roof” in April.
He said warmer winter weather “put a dent” in the winter fashion cycle, but “assisted in the clothing lines in April.”
Based on the report, IHS said it is improving its outlook for second quarter real consumer spending growth to 3.4 percent from 3.2 percent.
“The goods news for U.S. households continues, including strong employment and income gains, low interest rates and oil prices and strong finances,” he added.
Scott Hoyt, senior director of consumer economics at Moody’s Analytics, said the report “beat the doors off expectations.”
“We think retail sales growth should be gradually picking up,” Hoyt said. “The wage growth story should be positive, particularly as we get later into year. Retail deflation has been a significant problem for retailers and with dollar finally moderating a bit and gas prices turning up that situation should be gradually changing. The outlook is relatively bright.”