Retail Sales Growth Weakens in April But Beats Expectations

Sales at U.S. retailers rose more than expected in April, lifted by a surprise gain in motor vehicle purchases, government data showed on Friday.

The Commerce Department said total retail sales rose 0.4 percent following an upwardly revised 2.1 percent surge in March. Sales in March were previously reported to have increased 1.9 percent. Retail sales have now increased for seven straight months.

Analysts polled by Reuters had forecast retail sales rising 0.2 percent last month. Compared to April last year, sales were 8.8 percent higher.

Motor vehicle and parts purchases unexpectedly rose 0.5 percent after increasing 6.7 percent in March. Analysts had expected auto sales to fall in April, after automakers reported a decline in unit sales.

Excluding autos, sales rose 0.4 percent last month after rising 1.2 percent in March. April's rise was in line with market expectations.

Households are now participating in the economy's recovery, encouraged by an improving labor market. Economic growth resumed in the second half of 2009 following the worst recession since the Great Depression and continued into the first quarter of this year.

Growth had been largely driven by businesses replenishing inventories. Consumer spending, which normally accounts for 70 percent of U.S. economic activity, grew in the first quarter at its fastest pace in three years.

Core retail sales, which exclude autos, gasoline and building materials, fell 0.2 percent after increasing 0.7 percent in March. Core sales correspond most closely with the consumer spending component of the government's gross domestic product report.

Clothing and clothing accessories sales fell 1.0 percent, after surging the prior month because of an early Easter holiday and warm weather. Building materials and garden equipment receipts, however, climbed 6.9 percent. Receipts at sporting goods, hobby and book stores fell 1.9 percent in April.

Sales at electronics and appliance stores slipped 0.4 percent, defying market expectations for a rise. Receipts at gasoline stations rose 0.5 percent.