[WASHINGTON] US retail sales growth slowed in April as the boost from households front-loading motor vehicle purchases ahead of tariffs faded and households pulled back on other spending against the backdrop of an uncertain economic outlook.
Retail sales edged up 0.1 per cent last month after an upwardly revised 1.7 per cent surge in March, the Commerce Department’s Census Bureau said on Thursday (May 15). Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, unchanged after a previously reported 1.5 per cent jump in March.
Estimates ranged from a 0.6 per cent decline to a 0.4 per cent gain.
Retail sales have see-sawed this year amid President Donald Trump’s chaotic tariffs policy. A 25 per cent global car and truck duty went into effect in April, unleashing a wave of pre-emptive buying by households eager to avoid higher motor vehicle prices.
Levies on Chinese imports were hiked to 145 per cent and a 10 per cent blanket duty was imposed on almost all imports into the United States, also encouraging consumers to engage in tariff front-running and supporting sales in April.
Though Washington and Beijing struck a 90-day truce in their trade war over the weekend, slashing tariffs on imports, uncertainty remained over what happens thereafter.
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Retail sales excluding automobiles, gasoline, building materials and food services fell 0.2 per cent in April after an upwardly revised 0.5 per cent gain in March. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
Economists had forecast core retail sales climbing 0.3 per cent after a previously reported 0.4 per cent advance in March.
Consumer spending ended the January-March quarter on a strong note, putting consumption on a higher growth trajectory heading into the second quarter.
Economists expect a modest rebound after the economy contracted at a 0.3 per cent rate pace last quarter amid a flood of imports, triggered by businesses trying to beat tariffs.
While consumer spending remains supported by solid wage gains from a resilient labour market, households are pulling back on discretionary spending on services like airline tickets and hotel stays because of the economic uncertainty and the recent stock market selloff.
Bank of America Institute viewed most households as being financially sound, with more consumers paying off their credit card balances every month, based on an analysis of the bank’s credit card data. But it noted that “we see some increase in the share of households making only the minimum payment on their credit cards, suggesting building pressures for some households.” REUTERS
