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First Cut: April retail sales disappoint for obvious and less obvious reasons

Retail and food sales for April were down 0.2% overall while ekeing out a minimal 0.1% gain excluding motor vehicles and parts. The decline in motor vehicles and parts (down 1.1%) was expected to restrain overall sales. Also expected was the rise in the dollar value of sales at gasoline stations (up 1.8%) due to increasing prices at the pump.

However, sales in other sectors were anticipated to be firmer than they were. In particular, the drop in building materials (down 1.9%) came at a time when consumers normally start to spend on sprucing up home exteriors and grounds. There was apparently little demand for other seasonal merchandise like clothing (down 0.2%) or sporting goods (up 0.2%). Department stores did better (up 0.7%) possibly related to demand for items related to the Passover/Easter period. Some of the slow sales tempo could be due to smaller and few tax refunds arriving in April at a time when these usually boost spending.

So called “core” retail sales — sales excluding motor vehicles, building materials, and gasoline — were flat in April from March.

It is probably more useful to consider the March/April retail sales data as a package. The late timing of Passover/Easter compared to 2018 means that some spending got shifted around.

The report gets the second quarter off to a lackluster start. Retail and food sales were up 3.1% compared to the year-ago month, sales excluding motor vehicles were up 3.3%, and the core was up 3.4%. These are respectable gains that should not be overlooked in the noise of month-to-month variation.

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