U.S. retail sales stagnated in April, after the previous two-month increase was revised downward, suggesting that high borrowing costs and rising debt have prompted consumers to be more cautious.
On Wednesday, May 15, the U.S. Department of Commerce released retail sales data for April. According to the data, retail sales in the United States increased by 0% month-on-month in April, lower than the market expectation of 0.4%, and the previous value was revised to 0.6% from 0.7%. Most of the spending during the month went to necessities like food and gas.
Specifically:
Excluding automobiles, retail sales increased by 0.2% month-on-month, with an expectation of 0.2%, and the previous value was revised to 0.9% from 1.1%.
Excluding automobiles and gasoline, retail sales fell 0.1% month-on-month, with an expectation of 0.2% and a previous value of 1%;
Core retail sales (excluding automobiles, gasoline, building materials and food services) fell 0.3% month-on-month, with an expectation of 0.1% and a previous value of 1%.
Sales declined in seven of the 13 categories, with non-store retailers, sporting goods and hobby retailers seeing the most significant declines. Gas station revenues rose 3.1% on the back of higher gasoline prices, while car sales declined.
These sales figures suggest that consumer demand, which has been supporting the economy, is weakening. While the labor market remains strong, providing consumers with ample spending power, high prices and interest rates could further squeeze household finances and limit discretionary purchases.
Analyst Chris Anstey was quoted by the media as saying that the US retail sales data looked slightly lower than expected. The data as the "control group" of GDP actually fell, falling by 0.3%.
At the same time, data released by the U.S. Bureau of Labor Statistics showed that the U.S. CPI increased by 3.4% year-on-year in April, unchanged from expectations and slightly down from the previous value of 3.5%; CPI rose 0.3% month-on-month in April, lower than expectations and the previous value of 0.4%.
After the release of the data, the futures of the three major U.S. stock indexes rose in the short term, with Nasdaq futures up 0.56%, S&P 500 futures up 0.54%, and Dow futures up 0.49%; U.S. Treasury yields continued to decline, with yields on 2- to 10-year yields falling more than 10bp during the day. The U.S. dollar index was lower in the short term and is now down 0.47%. The Japanese yen extended gains against the dollar, rising 1.1%. GBP/USD rose 0.6% to 1.2666, its highest since April 10.
Analyst Joseph Richter said the knee-jerk rally in the market may be more due to a significant slowdown in U.S. retail sales than to the close-to-expected CPI. For months, sales figures tend to be ahead of the goods CPI.
Traders have now raised their expectations for a rate cut by the Federal Reserve. Interest rate swaps show that traders see a more than 80% probability of a 25 basis point rate cut by the September Fed meeting.
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