Retail Sales Probably Cooled in April: U.S. Economy Preview
Sales at U.S. retailers probably slowed in April as the weather turned more seasonable and consumers took a breather following a pre-Easter holiday buying spree, economists said before a report this week.
The projected 0.2 percent gain in purchases would follow a 0.8 percent advance in March, according to the median forecast of 68 economists surveyed by Bloomberg News ahead of Commerce Department figures on May 15. Other data may show increases in the cost of living eased, home construction stabilized and manufacturing picked up.
Demand at building material, clothing and even furniture stores probably suffered last month compared with a weather- induced gain in the first three months of 2012, the warmest on record. Smaller employment gains may also make it more difficult for consumer spending to match last quarter’s advance, the biggest in more than a year.
“Households are still spending at a fairly healthy clip -- not at a spectacular rate,” said Paul Dales, a senior U.S. economist at Capital Economics Ltd. in London. “Things aren’t too bad at the moment.”
Retailers’ same-store sales trailed analysts’ estimates in April for the first time since November, according to industry data. Sales at Target Corp. (TGT), the second-biggest U.S. discount chain, rose 1.1 percent, falling short of a 2.9 percent projection.
Part of that slowdown may reflect seasonal events that pulled sales into the previous month. The average temperature in March was the warmest on record, and Easter fell on April 8 compared with April 24 in 2011.
Influence on Growth
The retail sales category used to calculate gross domestic product, which excludes auto dealers, building material stores and service stations, will show a 0.4 percent gain in April, the same as the prior month, according to economists surveyed.
Consumer spending, which accounts for 70 percent of the economy, grew at a 2.9 percent annual rate in the first quarter, the most since the last three months of 2010, according to data from the Commerce Department.
Weaker job creation threatens consumers’ ability to sustain spending at such levels. Employers took on 115,000 workers last month, the fewest since October, according to a May 4 Labor Department report. The jobless rate fell as people left the work force.
Less expensive gasoline will free up some cash for other goods and services. The average price of a gallon of regular gas fell to $3.73 on May 10 from a peak this year of $3.94 in early April, according to AAA, the nation’s largest auto club.
The decline in fuel costs is also showing up in measures of inflation. The consumer-price index was little changed in April after climbing 0.3 percent the prior month, according to the survey median before a Labor Department report May 15. Prices rose 2.3 percent over the past year, down from 2.7 percent in March.
Receding inflation is one reason Federal Reserve policy makers have indicated they see no need to raise borrowing costs. On May 16, the Federal Open Market Committee will issue minutes from its April 24-25 meeting, during which officials repeated their view that interest rates are likely to remain “exceptionally low” at least through late 2014.
Improvements in the housing market, which has been a drag on the expansion, would give central bankers reason to revise those plans. A May 16 report from the Commerce Department will probably show builders began work on homes at a 685,000 annual rate in April, up from 654,000 the prior month, according to the Bloomberg median forecast.
Manufacturing remains at the forefront of the expansion. Production at the nation’s factories, mines and utilities probably rose 0.6 percent in April after being little changed in the previous two months, economists projected a Fed report May 16 will show.
Release Period Prior Median Indicator Date Value Forecast ================================================================ CPI MOM% 5/15 April 0.3% 0.0% Core CPI MOM% 5/15 April 0.2% 0.2% CPI YOY% 5/15 April 2.7% 2.3% Core CPI YOY% 5/15 April 2.3% 2.3% Empire Manu. Index 5/15 May 6.6 9.5 Retail Sales MOM% 5/15 April 0.8% 0.2% Retail ex-autos MOM% 5/15 April 0.8% 0.2% Retail exauto/gas MOM% 5/15 April 0.7% 0.3% Retail control MOM% 5/15 April 0.4% 0.4% Business Inv. MOM% 5/15 March 0.6% 0.4% NAHB Housing Index 5/15 May 25 26 Housing Starts ,000’s 5/16 April 654 685 Housing Starts MOM% 5/16 April -5.8% 4.7% Building Permits ,000’s 5/16 April 764 728 Building Permits MOM% 5/16 April 6.9% -4.7% Ind. Prod. MOM% 5/16 April 0.0% 0.6% Cap. Util. % 5/16 April 78.6% 79.0% Initial Claims ,000’s 5/17 12-May 367 365 Cont. Claims ,000’s 5/17 5-May 3229 3235 LEI MOM% 5/17 April 0.3% 0.1% Philly Fed Index 5/17 May 8.5 10.0 ================================================================
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