US retail sales jumped 1.4% in April, the government said today, the best gain in seven months which reinforced hopes that the economy is doing better than first thought. Wall Street was betting on a month-on-month April increase of just 0.7%.
The Commerce Department said that excluding car sales, retail sales went up 1.1% compared to forecasts for a rise of 0.5%. Retail sales in the previous two months were revised higher by a total of 0.3 percentage points, which means the level of sales in April was 0.9 percentage points higher than expected.
The report showed strong momentum in consumer spending as the second US quarter began, and also indicated that the 'soft patch' in February and March may not have been as bad as previously estimated.
Compared to April last year, US retail sales were up 8.6% and excluding cars, 8.1% higher.
The figures came after the monthly international trade report yesterday showed that the US deficit shrank by 9.2% to $55 billion in March. The trade data surprised economists, who were expecting the deficit to reach new highs, and prompted expectations that first-quarter US growth will be revised up from the 3.1% first reported.
In April, sales at vehicle and parts dealers increased 2.5%. Sales at building and hardware store sales improved by 1.2%, suggesting the red-hot US property market remains buoyant. Clothing store sales jumped 2.8%, the biggest rise since October 2002. General merchandise store sales increased 1.5%, the largest gain in a year. Petrol station sales increased 1.9%, probably reflecting higher petrol prices in the month.
On the downside, electronics and appliance store sales fell 0.1% and sales at leisure-time stores such as sporting goods and books were down 0.3%.
