Dive Brief:
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Retail sales in the U.S. jumped in April and beat expectations, according to the U.S. Department of Commerce, fulfilling many economists’ hopes that sales would rally to help prop up the economy.
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Overall retail sales jumped 1.3% in April to a seasonally adjusted $453.44 billion, the largest gain since March last year. Economists polled by Reuters forecasted a 0.8% rise.
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Excluding automobiles, gasoline, building materials and food services, retail sales grew 0.9% in April and were revised upward for March to a 0.2% increase, the government said. Economists polled by Reuters had forecast an increase of those core retail sales of 0.3%.
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Apparel sales rose 1%, sporting goods and hobby store sales grew 0.2%, and electronics and appliance sales grew 0.5%. The healthiest gain, which will surprise nobody, were in e-commerce sales, at 2.1%. Building materials and home improvement sales fell 1%, according to the report.
Dive Insight:
Economists hailed the U.S. Commerce Department’s report Friday because it was essentially what they’ve been looking for considering the government’s reports on strengthening employment and even wages.
“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, told Bloomberg. “The breadth of this report was extremely constructive.”
It’s notable, though, that, while there were retail sales gains in many categories, auto sales lent a lot of the strength to the report. Even with the increase in apparel spending, many retailers will likely still struggle to attract customers, especially in apparel and especially in brick-and-mortar.
L Brands, Macy’s, Kohl’s, J.C. Penney, and Nordstrom have all reported disappointing results in recent days, while Sports Authority and Aeropostale are in the midst of bankruptcy proceedings that many believe they’ll exit only through liquidation. Meanwhile, the halt of a proposed merger between Staples and Office Depot leaves those retailers vulnerable to a tough office supplies space. All of these players are facing increased competition from e-commerce sales.
