Retail sales underperformed in April

May 15, 2025

April retail sales rose 0.1%, a touch higher than the consensus expectation for no change. That followed a revised 1.7% increase in retail sales for March.

Sales at motor vehicle dealers fell 0.1% in April after surging 6% in March. Purchases last month ahead of tariffs "borrowed" from the future. The decline was consistent with the drop in light vehicle sales to a 17.3 million annualized selling pace from 17.8 million in March. Reports indicate that foot traffic at dealerships tailed off at the end of April. That supersized gain in March may continue to borrow from spending over the coming months.

Other categories subject to high tariffs showed declines in April sales, or muted gains. Sales at sporting goods, hobby, book and music stores fell 2.5% after rising 3.8 in March. Clothing store sales declined 0.4% after jumping 1.1% the previous month. Electronic and appliance store sales rose 0.3% after increasing 1.5% in March.

Department store sales fell 1.4% in April after adding 0.4% the month before. Other general merchandise store sales, which include big-box discounters, lost less ground, down 0.2%. That suggests big-box stores continue to attract high-income households, or those that earn over $100,000 per year; recent Moody's research indicated that high-income households now account for half of all consumer spending.

Furniture store sales rose 0.3% in April while sales at building materials, garden equipment and supply dealers increased 0.8%, perhaps aided by unseasonably warmer weather. The weather likely lifted sales at restaurants and bars where sales rose 1.2% in April after rising 3% in March.

Core retail sales, which exclude eating and drinking places, automobile dealers, gasoline stations and building materials stores, declined 0.2% in April after rising 0.5% in March. That suggests consumer spending as reflected in real personal consumption expenditures (PCE) is off to a softer start for the second quarter of the year.

Online sales were muted for the second month in a row, up 0.2%, after rising 0.1% in March. E-commerce sales may be impacted by the elimination of the de minimis exemption, which allowed low-value imports, typically clothing, to enter the US duty free.