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Unexpected drop in April retail sales in the US

RETAIL sales in the United States fell for a second straight month last month, a disappointing performance that raised doubts about whether consumers were regaining their desire to shop. A rebound in consumer demand is a necessary ingredient for ending the recession in the US.

The US Commerce Department yesterday said retail sales fell 0.4 percent last month, much worse than the flat reading economists expected. The April weakness followed a 1.3-percent drop in March that was worse than first estimated.

Retail sales had posted gains in January and February after falling for six straight months, raising hopes that the all-important consumer sector of the economy might be stabilizing. But the setbacks in March and last month could darken some forecasts because consumer spending accounts for about 70 percent of economic activity.

The hope had been that consumers were starting to feel better about spending, helped by the start of tax breaks included in the US$787-billion stimulus bill. Households had spent the fall hunkered down in the face of thousands of job layoffs and the worst financial crisis since the 1930s.

The worse-than-expected April retail sales reading came despite a 0.2-percent increase in auto sales, which fell 2 percent in March. Excluding automobiles, the drop in retail sales would have been 0.5 percent, much worse than the 0.2-percent gain economists expected.

Sales outside of automobiles showed widespread weakness. Demand at department stores and general merchandise stores fell 0.1 percent, and sales at specialty clothing stores dropped 0.5 percent.

Sales also fell at furniture stores, electronics and appliance stores, food and beverage stores and petrol stations.

The performance at department stores and specialty clothing stores came as a surprise since the nation's big chain stores had reported better-than-expected results for last month.

Some clothing stores last month saw their declines level off, and Wal-Mart Stores Inc, the world's largest retailer, reported its same-store sales rose 5 percent, excluding fuel, beating expectations. Same-store sales, or sales in stores open at least one year, is considered a key indicator of a retailer's financial health.


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