Retail Sales Up Modest 0.4% in April on 1.1% Rise in Auto Purchases

Retail sales, aided by a rebound in auto purchases, rose a modest 0.4% in April, the government reported today.

The Commerce Department said sales climbed to a seasonally adjusted $139.9 billion last month after remaining flat in March and falling 0.4% in February.

The March figure was revised from an advance estimate of a 0.1% gain.

The April sales report was much weaker than expected by most economists, who had anticipated a surge of between 1% and 2% after two slow months. Retail spending accounts for about one-third of overall economic activity and is closely watched as a measure of overall economic growth.

Today’s report was expected to please stock and bond traders, who are looking for evidence of an economic slowdown as confirmation that the Federal Reserve Board can continue the pause in its drive to fight inflation with higher interest rates.

Auto sales rose a strong 1.1% in April, the first increase since November. Sales had fallen 0.5% in March and 1.8% in February. In recent weeks, auto makers have launched a new round of incentive programs in hopes of luring customers back into showrooms despite high interest rates for loans.

Excluding the automotive category, sales rose a sluggish 0.2% after inching up 0.1% in March and declining 0.1% in February.

Much of the strength outside of autos came at department and other general merchandise stores and at specialty clothing shops.

The Commerce Department said general merchandise sales were up 1% after a 0.1% gain in March.

Clothing stores reported a 3.6% gain last month, contrasted with a 0.5% drop a month earlier. It was the biggest jump since February, 1987.

In a separate report last week, the nation’s big retailers said the sales rebound was buoyed by strong purchases of women’s clothing, which had been in a slump for more than a year.

Sales of durable goods, “big-ticket” items expected to last three or more years, rose only 0.1% in April after falling 0.9% in March.

Sales of non-durable goods, meanwhile, rose 0.6% after a 0.5% rise.

Other categories reporting sales increases in April were gasoline stations, 2.2%, and food and grocery stores, 0.7%.

Categories posting declines included building supply and hardware stores, 0.5%; furniture stores, 1.2%; bars and restaurants, 0.9%, and drugstores, 1.6%.

For the three months from February through April, overall retail sales were up 5% from the same period in 1988, not much better than the rate of inflation.