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Retail sales flattened in April, falling short of Wall Street expectations

Retail sales flattened in April, falling short of Wall Street expectations

US consumers showed signs of slowing down in April.

Retail sales were flat in the month, according to Data from the Ministry of CommerceThis raises concerns about the consumer situation amid steady inflation and rising interest rates.

This represents a slowdown from the 0.6% monthly increase seen in March. Economists had expected a 0.4% increase in spending, according to Bloomberg data.

“The fact that retail sales stalled in April is not necessarily a sign of consumer spending, but at least for once it does show continuing evidence of an unstoppable consumer,” Tim Quinlan, chief economist at Wells Fargo, wrote in a note to clients.

Excluding automobiles and gas, retail sales fell 0.1% last month. Expectations were for an increase of 0.1%.

Non-store retailers, which include online sales, led the declines, down 1.2% from the previous month. Sporting goods and hobby stores also fell 0.9%. Meanwhile, sales at clothing and accessory stores rose 1.6% during the month, while gasoline sales rose 3.1%.

Wells Fargo’s Quinlan highlighted some unique events that likely accounted for the declines. The early Easter holiday and Amazon (AMZN) sales event are likely to boost sales in March while their absence in April is due to exaggerated declines, according to Quinlan.

“The result is that many households pushed forward demand and bought a range of things online in March, so it is not surprising to see that [nonstore retailers] Down 1.2% in April,” Quinlan.

Elsewhere in economic data on Wednesday, a new CPI reading showed that increases in US consumer prices slowed during April, a welcome sign for investors as a series of hotter-than-expected inflation rates at the start of the year fueled inflation. A tougher stance from the Federal Reserve on interest rate cuts.

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Read more: Inflation is ongoing, and prices rise and fall

As the Federal Reserve moves to keep interest rates high for longer than initially expected, economists have been closely monitoring any signs of weakness in the US economy.

“The moderation in the CPI in April is welcome after a string of higher readings in the first quarter and keeps alive the possibility that the Fed will begin cutting interest rates in September,” Kathy Bostiancic, chief economist at Nationwide, wrote in a note to clients this morning. . Retail sales in April provide further support for interest rate cuts in September.

Wednesday’s retail sales were the latest in a series of recent economic data that showed signs of faltering economic growth.

In April, the US economy added fewer jobs than expected, while unemployment rose unexpectedly and wage growth declined. Other data also showed a contraction in manufacturing activity in April and weekly unemployment claims reached their highest level since August 2023.

“Consumer spending is slowing as higher interest rates weigh on interest rate-sensitive spending and as the labor market slows,” Michael Pearce, deputy chief US economist at Oxford Economics, wrote in a note to clients. “With overall balance sheets solidifying and the labor market slowing rather than collapsing, we expect the slowdown to remain gradual.

“The economy’s resilience frees the Fed to focus on incoming inflation data to guide its interest rate decisions.”

GLENDALE, CA - DECEMBER 26: Shoppers gather at the Barnes & Noble Americana store at Brand Mall the day after Christmas on December 26, 2023 in Glendale, California.  U.S. retail sales rose 3.1% year over year this holiday season, based on in-store and online purchases, according to Mastercard SpendingPulse.  (Photo by Mario Tama/Getty Images)

Shoppers gather at the Barnes & Noble Americana store at Brand Mall the day after Christmas on December 26, 2023, in Glendale, California. (Photo by Mario Tama/Getty Images) (Mario Tama via Getty Images)

Josh Schaeffer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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