Retail sales stall as consumers avoid shopping

Retail sales are flat in April as shoppers avoid buying

U.S. consumers stayed away from shopping in April despite warmer weather and the Easter holiday, leaving retail sales stagnant. 

Retail sales were flat last month compared to March, the Commerce Department said Wednesday. That was below analyst predictions of 0.2% growth. The tally ticked up 0.1% when the volatile measure of motor vehicle and parts was stripped out.

Analysts said shoppers continue to be wary of spending, a trend that led to a string of lackluster months in winter before a slight climb in retail sales last month.

"Retail sales disappointed in April," said Jack Kleinhenz, chief economist for the National Retail Federation. "Consumer spending on a year-over-year basis was anemic."

Although some experts had predicted pent-up demand would push shoppers into stores once the weather thawed, many consumers opted to sock away their savings from cheaper gas prices to pay down debt. And now that gas prices have rebounded, shoppers have even less cash to splurge on trips to the mall. 

Retail sales are considered a bellwether of consumer spending, which makes up two-thirds or more of U.S. economic activity. In April, the measure was up 1.5% from the same month in 2014.

Consumers remain in a frugal mindset despite other signs that the economy is improving. The national unemployment rate dipped to 5.4% in April, the lowest level in nearly seven years. 

But the pace of wage growth -- which many economists have blamed for weak retail sales -- slowed sharply last month. Average hourly earnings climbed just 3 cents last month, half of March's increase. 

A West Coast ports dispute and unusually bad weather in some parts of the country also depressed sales at some retailers.

Macy’s said Wednesday that its profit for the first quarter dropped 13%. The department store chain blamed much of the slide on lower spending by foreign tourists, bad weather and the backup at the ports of Los Angeles and elsewhere.

But some industry watchers expect consumers to make a comeback as summer approaches.

"Despite the weak report, the outlook remains positive," said Scott Hoyt, an economist at Moody's Analytics. "Job gains remain sufficient to tighten labor markets, which will lift earnings. Housing markets will keep improving as well, as rising house prices lift wealth and construction."

A few sectors showed strength. Americans dined out in April, pushing sales at food and drinking establishments up 0.7%. Clothing and accessories shops reported growth of 0.2%. Health and personal care stores grew by 0.8%.

But several categories showed a slump. Gasoline stations, whose low prices were expected to boost spending, dipped 0.7%. Furniture stores fell by 0.9%. electronics shops slid 0.4% and department stores dipped 2.2%. 

Follow Shan Li on Twitter @ByShanLi

Copyright © 2016, Los Angeles Times

UPDATE

10:11 a.m.: This story has been updated with Macy's earnings.

This story was first published at 6:47 a.m.

45°