U.S. Retail Sales Climb 0.5% in April, Bolstered by Gas and Online Spending

U.S. retail sales advanced 0.5% in April, aligning with consensus forecasts and indicating continued consumer spending. Including revisions to prior months, the increase reached 0.7%. On a yearly basis, retail sales have grown 4.9%. Excluding the volatile automotive sector, sales saw a 0.7% rise in April, or 0.9% with revisions, translating to a 6.3% increase over the past year.

The strongest gains during the month were observed at gasoline stations and nonstore retailers, encompassing online and mail-order purchases. Conversely, the largest declines were reported in the auto and clothing sectors. Stripping out autos, building materials, and gasoline, a measure often used to estimate Gross Domestic Product (GDP), sales still increased by 0.5% in April, climbing 0.8% when prior month revisions are included. If this pace holds for May and June, these sales are projected to expand at an annualized rate of 5.1% in the second quarter compared to the first quarter average.

Despite ongoing inflationary concerns, consumer spending demonstrated resilience in April. While a significant 2.8% jump at gasoline stations, driven by national gas prices reaching their highest levels since 2022, contributed to the overall increase, gains were broad across various categories. Nine of thirteen major sales categories saw growth, with autos being a notable exception, declining 0.4%. "Core" retail sales, which exclude the more volatile categories of autos, building materials, and gasoline, are closely monitored for their insights into underlying consumer demand and their relevance to GDP estimations. This core measure increased 0.5% in April, or 0.8% with revisions.

Within the core grouping, nonstore retailers continued their strong performance, rising 1.1% in April and marking the third gain above 1.0% in the last four months. This category has seen an impressive 11.1% increase over the past year, making it one of the highest-growth core segments. The only core categories to experience declines in April were clothing stores and furniture stores, falling 1.5% and 2.0% respectively. The restaurant and bar sector, offering the sole glimpse into services spending within this report, saw a 0.6% rise in April but has lagged overall sales with only a 2.7% increase year-over-year. Although nominal retail sales have climbed 4.9% annually, it is important to consider the impact of inflation. "Real" or inflation-adjusted sales have increased a modest 1.1% in the past twelve months and remain below their April 2022 peak, suggesting a softer broader picture despite robust nominal figures. Higher-than-normal tax refunds may also be temporarily bolstering consumer spending.

In related economic news, initial jobless claims increased by 12,000 last week to 211,000, while continuing claims rose by 24,000 to 1.782 million. Additionally, import prices surged 1.9% in April, and export prices jumped 3.3%, both representing the largest monthly increases since 2022. Over the past year, import prices are up 4.2%, and export prices have risen 8.8%.

Key terms:

1. Retail sales: A measure of the total receipts of retail stores by samples of firms representing the entire retail trade. It indicates the overall health of consumer spending.

2. Nonstore retailers: Businesses that sell goods through channels other than physical stores, such as online marketplaces, mail-order catalogs, or television shopping networks.

3. Gross Domestic Product (GDP): The total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period. It serves as a comprehensive scorecard of a given country's economic health.