Retail sales disappoint

May 15, 2024

Retail sales disappointed in April, coming in below expectations at 0% month-over-month. That is less surprising given the slowdown in credit card usage in the first quarter and into April; the Visa spending index plummeted -4.9% during the month. Both February and March held their strong prints with revisions at 0.7% each month.

Sales of motor vehicles and parts fell 0.8% after March was revised slightly upwards. Consumers have been struggling under higher interest rates to purchase vehicles, even as prices fall and sellers sweeten their deals. That marks two consecutive months of declines for motor vehicles and parts after a strong jump in February. Excluding motor vehicles and parts dealers, retail sales still rose at a tepid 0.2%.

Sales at furniture stores declined 0.5% in April; they fell nine out of the last 12 months given the less certain outlook for the housing sector with higher rates. Building materials, garden equipment and supply stores have all done better than furniture stores, rising 0.5% in April after adding 0.4% in March. Warmer-than-average temperatures during the two months kick-started homeowners into their spring and summer upgrades.

Sales at clothing and accessory stores rose 1.6% after declining for three consecutive months. That is the best reading for the series since January 2023. Clothing prices have been rising in recent months, by 1.2% in April.

Sales at general merchandise stores fell 0.3%, the first decline since November last year. Big-box retailers and warehouse-style stores had been posting large gains relative to department stores; however, that reversed in April. Online sales fell 1.2% after a strong March number. That is the worst reading since November 2022 for e-commerce. Online shopping is still outperforming overall retail sales despite some weak readings in recent months.

Sales at restaurants and bars picked up 0.2% in April after a downward revision in March. Much of the initial post-pandemic excitement to get back to eating out has been exhausted, but food and drinking establishments are still performing well as demand remains elevated for services.

Core retail sales, which feed into the calculation of GDP, fell by 0.1% in April, disappointing expectations. February and March were revised lower, implying a potential revision to first quarter personal consumption expenditures.