After 2nd largest monthly gain on record, Retail Sales flat in April
|Summary
Retail sales were unchanged in April after upward revisions lifted March numbers to the2nd highest monthly gain on record. Increased spending on autos and restaurants offset weakness in other areas.
No change after record surge
Retail sales were unchanged in April after stimulus checks in the prior month drove the second-largest increase on record. Still, the outturn was short of the consensus expectation, which was anticipating a modest gain; although the upward revision to the March figures softens the blow considerably.
The on-again, off-again dynamic with spending and big cash windfalls has injected new volatility into retail sales figures. Consider for example, in the 10-year period ending December 2019, the average monthly change in retail sales was just 0.3% with a high of +2.2% and a low of -2.0%. Between last year's lockdowns and our opening surge in goods spending, this year's stimulus checks, and late winter storms, it's no wonder why retailers are struggling to manage inventory and anticipate demand.
Some of the areas tied to goods spending have seen sales bounce back more quickly throughout the past year, but some of these categories gave up ground in April. The biggest percentage decline was the 5.1% drop at clothing stores, followed by a 4.9% decline in the much larger category, general merchandise stores. Even online retailers who have generally fared well in this cycle saw a modest giveback of 0.6% on the month.
You're motoring, what's your price for flight?
Unlike last summer when most people were stuck at home, just about everybody is ready to get out and go someplace this summer. There are signs everywhere you look and getting your hands on a vehicle is proving to be a tall order. Autos dealers saw a monthly increase of 3.1% in April, although, with limited inventories on dealer lots, we expect to see this category lose ground in the coming months.
Long lead times due to supply shortages, particularly in semiconductors, are slowing autos production and limiting inventory on dealer lots. The scarcity is driving some buyers into the pre-owned auto market, driving a spike in used car prices, a key factor in this week's jolting CPI report. Along the same theme, airfare costs are rising and the bargain-basement offers airlines offered months ago are quickly disappearing as demand rebounds.
The inventory to sales ratio for autos is the lowest it has been at any time since the "Keep America Rolling" auto incentive stimulus program put into place to help spur the economy in the wake of the9/11 attacks almost 20 years ago.
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