APRIL SALES DROP 0.2 PERCENT
Byline: Jim Ostroff
WASHINGTON — April’s weather was cold, wet and dreary — and so were retail sales, unexpectedly falling 0.2 percent, the Commerce Department reported Thursday.
This surprised market analysts, who were looking for Commerce to report a 0.4 percent rise in these sales when its monthly review of retail spending was issued.
Part of the falloff was due to a 2.3 percent drop in gasoline station sales, which coincided with a spike in energy costs that finally began to moderate in late April. But a 0.9 percent decline in apparel and accessories stores sales, to $11.76 billion, also contributed to April’s worse-than-expected performance in this key economic indicator. Year-to-year sales for these stores were up 4.7 percent.
Overall, retail sales were $265.9 billion in April, following a total take of $266.5 billion in March, which made for a 0.2 percent slide.
Sales at department stores climbed 0.4 percent in April to $25.96 billion from $25.86 billion in March, and rose 6.6 percent for the year. General merchandise stores, including discount, department and variety retailers, posted sales gains of 0.4 percent last month to $33.31 billion compared with $33.19 billion in March. For the year ending in April, general merchandise store sales were up by 6.4 percent.
Looking at the broader picture, market and economic analysts concurred that April’s retail sales dip — that also depressed hardware, building and new-car sales — was largely weather related and does not indicate the economy is headed for the deep freeze.
Consequently, the consensus was that the Federal Reserve would raise interest rates by up to one-half of one percent when it meets Tuesday in order to keep inflation and the economy from overheating. The Fed has raised interest rates by a quarter-percent five times since last June, which economists said mainly curtailed consumer spending on new homes, autos and other big ticket products such as home furnishings.
Rosalind Wells, the National Retail Federation’s chief economist, cautioned against reading too much into April’s retail sale slide.
“The cold and wet weather was definitely not conducive to traditional spring purchases” in any of the retail sectors, Wells said.
The economist said that March retail sales were “unexpectedly strong,” noting that the 1.4 percent gain Commerce reported a month ago was revised to 1.6 percent upon further review.
“We still expect healthy retail sales for the rest of the year,” she said, since “economic factors remain positive with little slowdown in consumer spending.”