April retail sales unexpectedly strong


U.S. retail sales excluding cars were surprisingly strong in April, showing that consumers were still willing to add spending punch to the economy despite soaring food and energy prices, a government report showed Tuesday.

The report echoed recent data that implied underlying economic durability, including fewer job losses in April than had been feared and a surprisingly strong pace of first-quarter productivity that buoyed hope for corporate profits.

The Commerce Department said retail sales declined 0.2% but excluding cars, sales rose 0.5%. Economists expected total sales to slip 0.1%, but had forecast just a 0.2% gain outside of autos.

"I think it's a report that tells you the economy is very weak, but if we are in a recession it's going to be a real short one," said Robert MacIntosh, chief economist at Eaton Vance Corp. in Boston.

In April, sales of building materials gained 1.9%, more than reversing March's 1.5% fall. General merchandise store sales were up 0.5%, well ahead of March's 0.1% rise.

Lofty gasoline prices have pinched consumers' pocketbooks and reduced their interest in new cars.

Auto dealers suffered a 2.8% drop in sales during April, adding to the 0.5% decline posted in March. Gasoline stations reported a 0.4% decline in sales after a 1.6% rise in March.

Analysts hope that consumer spending will cushion an economic slowdown and offset the dampening effect of falling housing prices, particularly with government rebate checks being sent to about 130 million taxpayers under a stimulus plan.

The economy is forecast to grow at a scant 0.2% annual rate in the second quarter, slowing from the anemic 0.6% growth rate in the previous two quarters, according to a survey of economists released Tuesday by the Philadelphia Federal Reserve Bank.

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