Solid boost for retail sales in April
WASHINGTON – U.S. retail sales rose at a solid pace in April, a sign that consumers may be rebounding from weak spending earlier this year and driving stronger economic growth.
Retail sales increased at a 0.3 percent rate in April, the Commerce Department said Tuesday, down from a 0.8 percent gain in March, which was revised higher from 0.6 percent. The spending gains were spread across most retail categories, with especially big gains at furniture and clothing stores.
Consumer spending has rebounded in the past two months after a weak January and February, a trend that could accelerate growth in the April-June quarter.
“Consumption growth is on track for a big rebound in the second quarter, which should push overall GDP growth up to more than 3 percent,” said Michael Pearce, senior U.S. economist at Capital Economics. That would represent an improvement from the January-March quarter when the economy expanded at a 2.3 percent annual rate.
A strong job market, which is showing early signs of lifting Americans’ incomes, could help drive spending gains in the months ahead. Tax cuts have also left most U.S. households with more money to spend, though that extra cash has been eroded in recent weeks by sharply higher gasoline prices. The unemployment rate has reached a 17-year low of 3.9 percent. And measures of consumer confidence remain mostly healthy, despite higher gas costs and a rocky stock market.
Categories: The Commerce Department’s retail sales data showed that clothing-store sales, fueled by price cuts, jumped 1.4 percent. Sales at home and garden stores rose 0.4 percent. A category that includes online and catalog sales increased 0.6 percent.
Consumer spending climbed at a 4 percent annual rate in the final three months of last year, the sharpest increase in three years. Americans then cut back in January and February before rebounding in March.
Gas station sales rose 0.8 percent in April, less than some analysts forecast, largely reflecting price increases. Prices at the pump have risen in the past year, lifted mostly by oil price gains. Tuesday’s figures suggest that the price increases haven’t yet dragged down other spending. But that could change. Analysts expect gas prices to keep rising as the summer driving season gets underway.
The average price for a gallon of gas nationwide reached $2.88 Tuesday, up 17 cents from a month earlier and 54 cents from a year ago, according to AAA.
Retail sales are closely watched by economists because they provide an early read on consumer spending, the principal driver of the U.S. economy. Store purchases account for about one-third of U.S. consumer spending. Spending on services, such as haircuts and mobile phones plans, makes up the remaining two-thirds.
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