Retail sales in the U.S. fell in April, led by a slump in auto purchases that masked stronger- than-forecast gains elsewhere, indicating rising energy bills and a faltering labor market haven't stopped Americans from shopping.
Purchases dropped 0.2 percent last month after a 0.2 percent increase in March, the Commerce Department said. Purchases excluding automobiles increased 0.5 percent, more than twice as much as anticipated.
The gains may raise expectations that consumers will spend their tax rebate checks at malls and restaurants in coming months, cushioning the economic slowdown. Still, tougher lending rules and declines in payrolls and property values indicate any rebound may be short-lived.
"Excluding autos, core retail sales were quite strong,'' said Julia Coronado, senior U.S. economist at Barclays Capital in New York. "It's an indication that consumers are more resilient than anticipated.''
Import Prices Rise
Another government report showed prices of goods imported into the U.S. increased 1.8 percent in April, led by a jump in fuel costs and metals. Prices excluding petroleum increased 1.1 percent on higher costs for capital goods, industrial supplies and auto parts.
Treasuries fell, pushing yields higher. The benchmark 10- year note yielded 3.84 percent as of 8:45 a.m. in New York, up 4 basis points from yesterday.
On retail sales, the median forecast of 76 economists surveyed by Bloomberg News projected a 0.2 percent decline. Estimates ranged from a drop of 0.9 percent to a 0.6 percent increase.
Excluding automobiles, sales were projected to increase 0.2 percent.
Today's report showed purchases at automobile dealerships and parts stores dropped 2.8 percent, the most since June, after a 0.5 percent decrease in March.
Industry figures last week showed cars and light trucks sold at an annual pace of 14.4 million in April, the fewest in almost a decade.
Gasoline Sales
Filling station sales also dropped, even as gasoline prices surged. The 0.4 percent decrease last month followed a 1.6 percent gain in March.
The report showed strength in housing-related areas, such as building materials, furniture and appliances. The 1.9 percent jump in demand at suppliers of building materials was the biggest since May 2007. Restaurant sales also improved by 0.9 percent, the most this year.
Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product, sales climbed 0.4 percent, matching the previous month's gain that was larger than estimated last month. The government uses data from other sources to calculate the contribution from the three categories excluded.
Today's report may prompt some economists to boost expectations. Consumer spending is forecast to grow at an annual rate of 0.5 percent this quarter, down from a 1 percent pace in the first three months of 2008 and the smallest gain in almost 17 years, according to the median estimate of economists surveyed by Bloomberg News from May 2 to May 8.
Stimulus Checks
Spending will rebound to a 2.3 percent growth rate in the third quarter as the bulk of the $117 billion in tax-rebate checks included in a government stimulus plan are spent, the survey showed. That will be followed by a deceleration to a 1.6 percent pace at the end the year.
In the two weeks since the payments started, the government sent out $27.2 billion in rebates, the Treasury Department said May 9.
The stimulus probably won't be enough to keep the economy from stagnating in the second quarter. The economists surveyed by Bloomberg forecast overall growth this quarter at a 0.1 percent pace, the weakest since 2001.
Shoppers have been flocking to discount stores to stretch their paychecks and stock up on staples and gasoline. Costco Wholesale Corp., the largest U.S. warehouse-club chain, last week said April sales at stores open at least a year rose 8 percent as customers sought less-expensive clothing and discounted fuel.
Wal-Mart Stores Inc., the world's largest retailer, said sales at stores open at least a year climbed 3.2 percent last month. The Bentonville, Arkansas-based company today announced a higher first-quarter profit and forecast second-quarter earnings that may trail analysts' estimates.
Fed's Meeting
Continuing price gains as oil, corn and other commodity prices soar, may prompt the Fed to keep its benchmark rate at 2 percent at its June 25 meeting, according to trading in the futures market.
Housing is likely to continue to be the economy's weakest component for the rest of the year. That indicates demand for building materials, furniture and appliances may not keep growing.
Purchases dropped 0.2 percent last month after a 0.2 percent increase in March, the Commerce Department said. Purchases excluding automobiles increased 0.5 percent, more than twice as much as anticipated.
The gains may raise expectations that consumers will spend their tax rebate checks at malls and restaurants in coming months, cushioning the economic slowdown. Still, tougher lending rules and declines in payrolls and property values indicate any rebound may be short-lived.
"Excluding autos, core retail sales were quite strong,'' said Julia Coronado, senior U.S. economist at Barclays Capital in New York. "It's an indication that consumers are more resilient than anticipated.''
Import Prices Rise
Another government report showed prices of goods imported into the U.S. increased 1.8 percent in April, led by a jump in fuel costs and metals. Prices excluding petroleum increased 1.1 percent on higher costs for capital goods, industrial supplies and auto parts.
Treasuries fell, pushing yields higher. The benchmark 10- year note yielded 3.84 percent as of 8:45 a.m. in New York, up 4 basis points from yesterday.
On retail sales, the median forecast of 76 economists surveyed by Bloomberg News projected a 0.2 percent decline. Estimates ranged from a drop of 0.9 percent to a 0.6 percent increase.
Excluding automobiles, sales were projected to increase 0.2 percent.
Today's report showed purchases at automobile dealerships and parts stores dropped 2.8 percent, the most since June, after a 0.5 percent decrease in March.
Industry figures last week showed cars and light trucks sold at an annual pace of 14.4 million in April, the fewest in almost a decade.
Gasoline Sales
Filling station sales also dropped, even as gasoline prices surged. The 0.4 percent decrease last month followed a 1.6 percent gain in March.
The report showed strength in housing-related areas, such as building materials, furniture and appliances. The 1.9 percent jump in demand at suppliers of building materials was the biggest since May 2007. Restaurant sales also improved by 0.9 percent, the most this year.
Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product, sales climbed 0.4 percent, matching the previous month's gain that was larger than estimated last month. The government uses data from other sources to calculate the contribution from the three categories excluded.
Today's report may prompt some economists to boost expectations. Consumer spending is forecast to grow at an annual rate of 0.5 percent this quarter, down from a 1 percent pace in the first three months of 2008 and the smallest gain in almost 17 years, according to the median estimate of economists surveyed by Bloomberg News from May 2 to May 8.
Stimulus Checks
Spending will rebound to a 2.3 percent growth rate in the third quarter as the bulk of the $117 billion in tax-rebate checks included in a government stimulus plan are spent, the survey showed. That will be followed by a deceleration to a 1.6 percent pace at the end the year.
In the two weeks since the payments started, the government sent out $27.2 billion in rebates, the Treasury Department said May 9.
The stimulus probably won't be enough to keep the economy from stagnating in the second quarter. The economists surveyed by Bloomberg forecast overall growth this quarter at a 0.1 percent pace, the weakest since 2001.
Shoppers have been flocking to discount stores to stretch their paychecks and stock up on staples and gasoline. Costco Wholesale Corp., the largest U.S. warehouse-club chain, last week said April sales at stores open at least a year rose 8 percent as customers sought less-expensive clothing and discounted fuel.
Wal-Mart Stores Inc., the world's largest retailer, said sales at stores open at least a year climbed 3.2 percent last month. The Bentonville, Arkansas-based company today announced a higher first-quarter profit and forecast second-quarter earnings that may trail analysts' estimates.
Fed's Meeting
Continuing price gains as oil, corn and other commodity prices soar, may prompt the Fed to keep its benchmark rate at 2 percent at its June 25 meeting, according to trading in the futures market.
Housing is likely to continue to be the economy's weakest component for the rest of the year. That indicates demand for building materials, furniture and appliances may not keep growing.
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