Retail Sales: Exceed Expectations Despite Auto Decline in April
Retail sales fell 0.2 percent in April, meeting expectations. Excluding motor vehicles, sales rose 0.5 percent with an upward revision to March. Motor vehicle sales fell for the third consecutive month. Building materials and electronics led the increase, rising 1.9 and 1.4 percent, respectively. Tax rebates should give a lift to consumer spending in the third quarter.
Auto Slump Put the Brakes on Retail Sales
- Sales excluding motor vehicles and gasoline increased 1.3 percent. Electronics, building materials and food contributed to the increase.
- Auto sales continue to be volatile, but the underlying trend is declining. Rising gas prices and tighter lending standards will continue to strain auto sales.
Tax Rebates to the Rescue
- With the accelerated pay-out of rebate checks, the rise in disposable income will help to lift retail sales in the coming months. Discretionary items such as electronics and appliances should benefit from the tax rebate.
- We expect real consumer spending to climb to a 4.2 percent pace in the third quarter.
Wachovia Corporation
http://www.wachovia.com
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