Sales at US retailers rose more than expected in April, lifted by a surprise gain in motor vehicle purchases, government data showed today.
The Commerce Department said total retail sales rose 0.4 per cent following an upwardly revised 2.1 per cent surge in March. Sales in March were previously reported to have increased 1.9 per cent. Retail sales have now increased for seven straight months.
Analysts polled by Reuters had forecast retail sales rising 0.2 per cent last month. Compared to April last year, sales were 8.8 per cent higher.
Motor vehicle and parts purchases unexpectedly rose 0.5 per cent after increasing 6.7 per cent in March. Analysts had expected auto sales to fall in April, after automakers reported a decline in unit sales.
Excluding autos, sales rose 0.4 per cent last month after rising 1.2 per cent in March. April's rise was in line with market expectations.
Households are now participating in the economy's recovery, encouraged by an improving labour market. Economic growth resumed in the second half of 2009 following the worst recession since the Great Depression and continued into the first quarter of this year.
Growth had been largely driven by businesses replenishing inventories. Consumer spending, which normally accounts for 70 per cent of US economic activity, grew in the first quarter at its fastest pace in three years.
Core retail sales, which exclude autos, gasoline and building materials, fell 0.2 per cent after increasing 0.7 per cent in March. Core sales correspond most closely with the consumer spending component of the government's gross domestic product report.
Clothing and clothing accessories sales fell 1.0 per cent, after surging the prior month because of an early Easter holiday and warm weather. Building materials and garden equipment receipts, however, climbed 6.9 per cent. Receipts at sporting goods, hobby and book stores fell 1.9 per cent in April.
Sales at electronics and appliance stores slipped 0.4 per cent, defying market expectations for a rise. Receipts at gasoline stations rose 0.5 per cent.
Meanwhile, US consumer sentiment edged up in May from April, in line with forecasts, while one-year inflation expectations were at their highest since June 2009.
The majority of consumers expected interest rate increases during the year ahead, the Thomson Reuters/University of Michigan's Surveys of Consumers report also showed.
The preliminary May reading on the overall index on consumer sentiment was 73.3, up from April's 72.2.
Analysts polled by Reuters had predicted a reading of 73.5 for May.
The one-year inflation expectation index rose to 3.1 per cent in May the highest since June 2009, from 2.9 per cent in April, while the five-to-10-year inflation measure rose to 2.9 per cent from 2.7 per cent.
The sentiment reading, which is largely unchanged since last September, when it came in at 73.5, is seen as a proxy for consumer spending that fuels 70 percent of the US economy.
"Consumers' buying plans responded negatively to the decline in available price discounts, although the overall level of buying attitudes for household durables remains well above the year-earlier readings," Richard Curtin, director of the surveys, said in a statement.
The surveys' gauge of current economic conditions edged up to 81.1 at the beginning of May from 81.0 in April. The May reading was slightly below the 81.9 forecast by analysts.
The barometer of consumer expectations also rose in May. It came in at 68.3 versus 66.5 in April. It was above the 67 level predicted by analysts.
The index of consumers' 12-month economic outlook rose to 84 in early May from 80 in April.
Reuters