Overall retail sales in the U.S. increased 1.3 percent in April, beating expectations and fueling optimism, according to the U.S. Department of Commerce.
Overall retail sales reached a seasonally adjusted $453.44 billion, the largest gain since March last year. Economists polled by Reuters had forecast a 0.8 percent rise.
Excluding automobiles, gasoline, building materials and food services, retail sales grew 0.9 percent in April and were revised upward for March to a 0.2 percent increase, the government said, compared to the forecast of 0.3 percent by economists polled by Reuters.
Apparel sales rose 1 percent, sporting goods and hobby store sales grew 0.2 percent, and electronics and appliance sales grew 0.5 percent. Predictably, the healthiest gains were in e-commerce sales, at 2.1 percent. Meanwhile, building materials and home improvement sales fell 1 percent, according to the report.
According to Bloomberg, these higher sales are being boosted by healthier household finances, reduced borrowing and increased savings, which allow consumers to spend more even as gas prices go back up and job growth slows.
“This is all part and parcel of the consumption numbers coming more in line with the income numbers we’ve been seeing,” Jacob Oubina, senior U.S. economist at RBC Capital Markets LLC in New York, told Bloomberg. “The breadth of this report was extremely constructive.”
The optimism should be cautious, however, as Bloomberg reports that employers added the fewest workers to payrolls in seven months during April, and the unemployment rate held steady at 5 percent. And since auto sales represented a large part of the increases in sales this spring, retailers will likely struggle to attract and keep customers, especially in apparel and in brick-and-mortar stores. Meanwhile, Macy’s reported a bleaker outlook that has also affected stocks for other stores as well, including Walmart, Ross Stores, and Michael Kors holdings Ltd.
