US Retail Sales Unchanged in April

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US retail sales stalled unexpectedly last month, a sign headwinds continued to soften the economic recovery at the start of the second quarter.

Retail sales were virtually unchanged in April following a gain of 1.1% in March that was also the first increase in four months, the Department of Commerce reported on Wednesday. The April reading was below the median estimate calling for a 0.2% increase.

Excluding automobiles, retail sales were up 0.1%, compared with forecasts calling for a 0.5% advance. Sales excluding automobiles had increased 0.7% a month earlier.

Year-on-year, retail sales were up 0.9%, official data showed. Total sales from February through April were up 1.5 percent compared to a year ago.

Retail sales were down in most categories in April, including motor vehicles and parts, furniture, electronics and appliance stores, food and beverage stores and gasoline stations. Sales increased at building material and garden equipment stores, clothing and accessory stores, health and personal care stores, food services and drinking places and nonstore retailers.

US gross domestic product barely increased in the first quarter, the Department of Commerce said last month in its advance estimate. US GDP expanded just 0.2% from a year earlier, well below estimates calling for a 1% gain. The slowdown mirrors last year’s disappointing start where the economy contracted unexpectedly as a result of severe weather.

The consumer spending component of gross domestic product advanced just 1.4% in the first quarter, compared to 4.4% in the final quarter of 2014. Consumer spending accounts for about 70% of US economic activity and is seen as a guidepost of the recovery.

The government will post revised first quarter GDP estimates later this month before releasing the final estimate in June.

Stagnant consumer spending gives the Federal Reserve plenty of justification for keeping interest rates at record lows. Policymakers are divided on when to begin normalizing monetary policy, but given the lack of economic growth in recent months, any future approach to rate-setting will be slow and gradual. The Fed is widely expected to hold rates near zero throughout the summer, with some market Fed policymakers calling for a rate increase next year.