U.S. retail sales cool after warm-weather spree

by The City Wire staff ([email protected]) 81 views 

BLOOMBERG — Retail sales rose in April at the slowest pace of the year as Americans took a break from a shopping spree induced by unseasonably warm weather in prior months and an earlier Easter holiday.

The 0.1% gain followed a 0.7% increase in March, the Commerce Department reported Tuesday (May 15). The April advance matched the median forecast in a Bloomberg News survey.

Sales of clothing declined, while purchases excluding cars, building materials and service stations — the category used to calculate gross domestic product — rose more than forecast. Other reports released Tuesday showed manufacturing in the New York region accelerated more than projected, and confidence among U.S. homebuilders jumped to a five-year high.

“Consumers overall are still pretty much engaged,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, the most-accurate forecaster of retail sales in the two years through April, according to data compiled by Bloomberg News. “Manufacturing is still a solid contributor to growth. It is growing with the pace of demand.”

Nine of 13 major categories showed gains in retail sales last month, led by auto dealers, furniture stores and non-store retailers that include online merchants. Purchases at restaurants rose 0.4% in April after a 0.9% gain the month before.

“From the industry perspective, we’ve seen a pretty decent trend in sales over the last year,” G. Price Cooper, chief financial officer of restaurant chain Texas Roadhouse Inc., said during a May 9 investor conference.

Part of the slowdown in retail sales for April may reflect seasonal events that pulled purchases into the previous month. The average temperature in March was the warmest on record in the U.S., and Easter fell on April 8 compared with April 24 the year before.

Consumer spending, which accounts for 70% of the economy, grew at a 2.9% annual rate last quarter, the most since the final three months of 2010, according to data from the Commerce Department.

Sustaining such a pace of purchasing may be more difficult with weaker job growth. Employers took on 115,000 workers last month, the fewest since October, a Labor Department report showed May 4. The jobless rate also declined as people left the work force.

The retail sales category used to calculate GDP increased 0.4% after a 0.5% increase in the previous month. The category was forecast to rise 0.3%, the Bloomberg survey showed.

Macy’s Inc., the owner of its namesake and Bloomingdale’s department stores, this week reported first-quarter profit that topped analysts’ estimates as sales at stores open at least a year advanced 4.4%. The Cincinnati-based retailer also boosted its same-store sales forecast to about 3.7% this year from a previous estimate of 3.5%.

Bentonville-based Wal-Mart Stores is set to release earnings on Thursday (May 17).

Sales climbed 0.5% at automobile dealers, after a 0.2% increase the prior month, Tuesday’s Commerce Department report showed. Cars and light trucks sold at a 14.4 million annual rate in April, up less than 100,000 from the prior month, according to data from Ward’s Automotive Group.

Manufacturers are getting a boost as auto sales running at the fastest pace in four years lift demand for goods from glass and machinery to sound systems.

Manufacturing makes up 12% of the U.S. economy.

Homebuilders are also gaining confidence as cheaper property prices and mortgage rates at a record low combine to boost demand. The National Association of Home Builders/Wells Fargo index of builder confidence rose to 29, the highest since May 2007, noted a Tuesday report from the Washington-based group.

The gauge exceeded the highest projection in a Bloomberg survey in which the median estimate was 26. Readings below 50 mean more respondents said conditions were poor.