By Lucia Mutikani
U.S. retail sales rose strongly in April as consumers spent more on motor vehicles amid an improvement in supply and increased spending at restaurants, providing a powerful boost to the economy at the start of the second quarter.
The broad rise in retail sales reported by the Commerce Department on Tuesday suggested demand was holding strong despite high inflation and souring consumer sentiment. It assuaged fears of an imminent recession. The economy’s underlying strength was underscored by other data showing production at factories accelerated in April.
Rising wages as companies scramble for scarce workers and massive savings accumulated during the COVID-19 pandemic are underpinning spending. Consumers are also increasing their usage of credit cards.
“Given this show of strength from consumers, speculation that the U.S. economy is in danger of an imminent plunge into recession looks badly misplaced,” said Paul Ashworth, chief U.S. economist at Capital Economics in New York.
Retail sales rose 0.9% last month. Data for March was revised higher to show sales advancing 1.4% instead of 0.5% as previously reported. April’s increase in retail sales, which reflected both strong demand and higher prices, was in line with economists’ expectations.
Retail sales are mostly comprised of goods and are not adjusted for inflation, which appears to have peaked in April.
The increase in retail sales was led by receipts at auto dealerships, which rebounded 2.2% after falling 1.6% in March. That offset a 2.7% decline in sales at gasoline stations. Prices at the pump retreated from record highs in April. They have, however, since surged to an average all-time high of $4.523 per gallon as of Monday, according to AAA.
Excluding gasoline, retail sales rose 1.3%. Receipts at bars and restaurants, the only services category in the retail sales report, increased 2.0%. Clothing store sales gained 0.8% as many workers return to offices. Online store sales advanced 2.1%.
Sales at electronics and appliance retailers jumped 1.0%, while receipts at furniture stores increased 0.7%. But sales at building material, garden equipment and supplies stores dipped 0.1%. Sales at sporting goods, hobby, musical instrument and book stores fell 0.5%.
U.S. stocks were trading higher. The dollar fell against a basket of currencies. U.S. Treasury yields rose.
Reuters
