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Retail sales barely register growth, stoke economy doubts

U.S. retail sales barely rose in April and a gauge of consumer spending slipped, which could temper hopes of a sharp acceleration in economic growth in the second quarter.

The Commerce Department said on Tuesday retail sales edged up 0.1 percent last month, held back by declines in receipts at furniture, electronic and appliance stores, restaurants and bars and online retailers.

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Retail sales, which account for a third of consumer spending, rose by a revised 1.5 percent in March. That was the largest increase since March 2010.

Import prices not much better

An employee hands a bag to a customer at a Uniqlo store in New York, Jan. 21, 2014.
Victor J. Blue | Bloomberg | Getty Images
An employee hands a bag to a customer at a Uniqlo store in New York, Jan. 21, 2014.

Economists polled by Reuters had forecast sales advancing 0.4 percent last month after a previously reported 1.2 percent surge in March.

Data such as employment, as well as manufacturing and services industries surveys had suggested the economy regained strength early in the second quarter after being weighed down by bad weather and a slow pace of restocking by businesses in the first three months of the year.

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But the retail sales report cast a shadow on that upbeat outlook. So-called core sales, which strip out automobiles, gasoline, building materials and food services, and correspond most closely with the consumer spending component of gross domestic product, fell 0.1 percent in April.

That followed a revised 1.3 percent advance in March.

Core retail sales had previously been reported to have risen 0.8 percent in March.

Last month, retail sales were restrained by a 2.3 percent drop in receipts at electronics and appliance stores. Sales at furniture stores fell 0.6 percent, while receipts at food services and drinking places dropped 0.9 percent.

Sales at non-store retailers, which include online sales, fell 0.9 percent.

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However, receipts at building materials and garden equipment stores rose 0.4 percent. Sales at auto dealerships increased 0.6 percent. There were also increases in sales at gasoline stations, reflecting higher pump prices.

Excluding gasoline and autos, retail sales fell 0.1 percent. Receipts at clothing stores rose 1.2 percent. There were also gains in receipts at sporting goods shops.

In a separate report, U.S. import prices unexpectedly fell in April as the cost of food and fuels declined, suggesting imported inflation pressures remain benign.

The Labor Department said import prices fell 0.4 percent last month after rising 0.4 percent in March. April's decline in import prices was the first since November.

Economists polled by Reuters had forecast import prices rising 0.3 percent. In the 12 months through April, import prices fell 0.3 percent.

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The lack of inflation pressures in the economy suggests the Federal Reserve could keep monetary policy very accommodative for a while even as labor market slack starts to ease.

The U.S. central bank slashed overnight interest rates to a record low of zero to 0.25 percent in December 2008 and pledged to keep them low while nursing the economy back to health. The Fed is scaling back the amount of money it is injecting into the economy through monthly bond purchases.

Image Source: Sarah-Jane Joel | The Image Bank | Getty Images

Last month, imported food prices fell 0.7 percent after surging 3.4 percent in March. Imported fuel prices dropped 1.7 percent last month after rising 0.6 percent in March.

Natural gas prices tumbled 18.5 percent in April, the largest fall since July 2013.

Import prices excluding food and fuels inched up 0.1 percent after rising by the same margin in March.

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The Labor Department report also showed export prices fell 1.0 percent in April. That was the biggest drop since June 2012 and followed a 1.0 percent rise in March. In the 12 months through April, export prices nudged up 0.1 percent.

By Reuters

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