• After surging in March, retail sales came back to earth in April, edging lower by 0.2% (month-on-month). The outturn was below consensus expectations which called for a 0.2% gain. The already-hefty increase in March was revised slightly higher to 1.7%  (from 1.6%).
  • Sales at gas stations had another strong month (+1.8%) as gas prices continued to rise in April. Meanwhile, following an outsized gain in March, auto sales took a step back in April, falling by 1.1%. Vehicle sales dropped to 16.4 million (SAAR) in April, down from an elevated 17.5 million units sold in March.
  • Excluding the most volatile components (gas, autos, building materials, and food services), the retail sales ‘control group’ was flat on the month (+1.1 prior) – also undershooting expectations for a 0.3% gain.
  • Delving further into the details, sales were weaker across most categories. After increasing for three consecutive months, sales of furniture were flat in April (and down 3.1% from the year ago). Sales of electronics & appliances also pulled back by 1.3% (+1.2% prior), and sales of building materials declined by 1.8% (+0.8% prior). Clothing was down -0.2% (+2.1% prior), personal care and health sales edged lower 0.2% after three months of gains. Ditto for non-store retailers, where sales also ebbed by 0.2% after sizeable gains in the three months prior.
    Department stores were the only category to see stronger growth in April (+0.7%), with sales rising for the first time since last November. Sales of food, general merchandise and at eating & eating places all edged up by a modest 0.2% on the month.

Key Implications

  • After a surge in March, retail sales were expected to moderate in April, and moderate they did. The flat reading in the control group is somewhat disappointing, but several of the categories that pulled back did so after solid gains in prior months. Importantly, today’s data doesn’t change the calculus for consumer spending in the second quarter significantly. We continue to expect a solid rebound in real personal consumption of roughly 3% (annualized), enough to drive real GDP growth of around 2.0%.
  • Some of the pull back in April was in housing-related categories, such as furnishings, electronics and building materials. This is contrary to other housing indicators that have shown progress in recent months. With lower mortgage rates and solid income growth, we expect housing activity to pick up in the months ahead, which augurs for a rebound in these spending categories as well.


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