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Retail sales gain points to healthier Q2

Value of sales increase 0.3% in April; bigger after-tax pay cheques help compensate for rising fuel costs

Nine of 13 major retail categories showed advances in April, led by the biggest jump in sales at apparel stores since March 2017.

New York

US retail sales rose for a second month in April in broad fashion as bigger after-tax pay cheques helped compensate for rising fuel costs, signalling consumer demand was off to a good start this quarter.

The value of sales increased 0.3 per cent, matching the median forecast, after a 0.8 per cent advance in the prior month that was stronger than initially reported, Commerce Department figures showed Tuesday.

So-called retail-control group sales, which are used to calculate gross domestic product and exclude food services, auto dealers, building materials stores and petrol stations, improved 0.4 per cent after an upwardly revised 0.5 per cent gain.

The results add to the expectation that consumer spending, the biggest part of the economy, will rebound from its first-quarter weak patch.

A strong job market and higher take-home pay in wake of tax reductions are buoying Americans' wherewithal to spend and cushioning the squeeze from costlier fuel that leaves people with less money to buy other goods and services.

Retail sales data for February were also revised up to unchanged from a previously estimated 0.1 per cent decrease.

Nine of 13 major retail categories showed advances in April, led by the biggest jump in sales at apparel stores since March of last year.

Increased receipts were also evident at furniture merchants, building-materials outlets, Internet retailers and department stores.

Filling-station receipts increased 0.8 per cent, the most since January and reflecting a jump in petrol costs that are now near the highest level since late 2014.

That probably boosted retail sales as Commerce Department figures aren't adjusted for price changes.

Excluding automobiles and petrol, retail sales also rose 0.3 per cent, after an upwardly revised 0.4 per cent gain in the previous month.

The Commerce Department's retail report may help economists tweak their forecasts for how consumer spending began the second quarter after growing 1.1 per cent in the first three months of 2018, a slowdown following three quarters of robust gains.

While consumer spending has remained solid in this expansion, business investment has also been posting strong growth in recent quarters.

Tax cuts that President Donald Trump signed into law at the end of 2017 were seen as providing a further jolt to consumption and capital spending that would spur growth toward the president's 3 per cent goal.

Economists including those at Bank of America Corp and JPMorgan Chase & Co have noted the recent run-up in petrol prices, and said persistently higher fuel costs this year would risk eroding a sizeable portion of the tax benefits.

Demand for automobiles barely rose. Purchases at automobile dealers climbed 0.1 per cent after increasing 2.1 per cent in the previous month. BLOOMBERG

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