U.S. retail sales declined last month as Americans cut back their spending on clothes, appliances, and home and garden supplies.
Sales dropped 0.2% in April, the Commerce Department said Wednesday, after a big 1.7% jump in March. Car sales dropped 1.1% last month and sales at electronics and appliance stores dropped 1.3%.
Economists are having a difficult time gauging the mood of consumers this year. Retail sales have been on a seesaw pattern, rising at a healthy pace in January, then falling in February, followed by the big jump in March and now a drop in April. The roller coaster pattern may partly result from the government shutdown in January, which disrupted the collection of economic data.
Still, analysts said the jump in March retail sales means that even after April’s small decline, sales are rising over time at a decent pace. Steady job gains and solid hiring will likely underpin future spending.
“The report is disappointing but far from a disaster,” Sal Guatieri, senior economist at BMO Capital Markets, said. “Though losing momentum amid fading support from tax cuts, consumer fundamentals remain supportive, suggesting households will pick up the pace in coming months.”
Overall consumer spending, which includes spending on services such as haircuts and travel, jumped in March by the most in nearly a decade, but that followed small increases in the previous two months. As a result, even though the economy grew a healthy 3.2% at an annual rate in the first quarter, consumer spending grew at a modest pace and was not a primary driver of that growth.
The weakness in sales last month was broad. Sales at clothing stores fell 0.2% and plunged 1.9% at home and garden supply stores. Furniture store sales were unchanged. Even the category that includes online retailers dropped. Excluding the volatile auto and gas categories, retail sales also fell 0.2%.
But sales at restaurants rose 0.2%, which Guatieri said is a positive sign because restaurant spending is discretionary and suggests consumers are still confident.
US Industrial Production Down 0.5% in April
U.S. industrial production fell in April, dragged by a big drop in factory output as production of autos and auto parts continued to slide.
Industrial output — reflecting total production at factories, utilities and mines — dropped 0.5% in April after a 0.2% March gain, the Federal Reserve reported Wednesday. Industrial production fell 0.5% in February.
Manufacturing output fell 0.5%, led by a 2.6% decline in motor vehicles and parts, which has fallen in three of the past four months.
Production at the nation’s utilities fell a sharp 3.5%. Production at mines, a sector that also covers oil and gas drilling, rose 1.6%.
Manufacturing has struggled over the past year, reflecting weakness in auto sales and the global economy and rising trade tensions.
Industry analysts blame the decline in auto sales in the first quarter on rising vehicle prices, competition from an abundant supply of late-model used vehicles and relatively high interest rates.
In addition to falling auto sales, manufacturers have been battered by trade tensions stemming from President Donald Trump’s get-tough trade policies, which are aimed at narrowing America’s perennial trade deficits. He says they have cost America millions of manufacturing jobs.
In the past week, the United States and China, which had already slapped punitive tariffs on $350 billion worth of each other’s goods, moved to impose further penalties after negotiations on a new trade deal between the world’s two biggest economies reached an impasse.
The United States is seeking a new trade agreement to combat Beijing’s aggressive push to challenge U.S. technological dominance. The increased tariffs have rattled financial markets, although Trump has said he still hopes to achieve a trade deal in coming weeks.
Total industrial production is up just 0.9% over the past year. Manufacturers in April operated at just 75.7% of capacity, down from 76.2% in March.
© The Associated Press. All rights reserved.
