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May 16, 2018

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US retail sales climb moderately

US retail sales rose moderately in April as rising gasoline prices cut into discretionary spending, but consumer spending appeared on track to accelerate after slowing sharply in the first quarter.

The Commerce Department said yesterday that retail sales rose 0.3 percent last month after surging 0.8 percent in March. Last month’s increase in retail sales was in line with economists’ expectations.

Retail sales in April increased 4.7 percent from a year ago.

Excluding automobiles, gasoline, building materials and food services, retail sales rose 0.4 percent last month after adding 0.5 percent in March. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Consumer spending braked sharply in the first quarter, growing at its slowest pace in nearly five years, amid delays in processing tax refunds. Economists also say clean-up efforts in the wake of back-to-back hurricanes in late 2017 had pulled forward spending into the fourth quarter.

While consumer spending is picking up, the rise could be limited by gasoline prices, which have risen about 31 cents per gallon this year. The gasoline price rise, if sustained, could blunt the impact of lower income taxes on consumer spending.

Gasoline prices are near $3 per gallon, according to data from the US Energy Information Administration. With crude oil prices rising after President Donald Trump’s decision last week to pull the United States out of an international nuclear deal with Iran and vow to put tough sanctions on Tehran, gasoline prices are likely to remain elevated.

Consumer spending, which accounts for more than two-thirds of US economic activity, grew at a pedestrian 1.1 percent annualized rate in the first quarter. The economy expanded at a 2.3 percent pace in the January-March period.

In April, auto sales edged up 0.1 percent after rising 2.1 percent in March. Receipts at service stations added 0.8 percent, reflecting higher gasoline prices, following a 0.3 percent gain in March.

Sales at restaurants and bars fell 0.3 percent, the largest drop since February 2017. Americans also cut back on spending on hobbies as receipts at sporting goods and hobby stores dipped 0.1 percent last month, matching March’s drop.


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