Retail Sales Just Ain’t What They Used To Be:
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On the surface the investors should be celebrating April’s higher than estimated retail sales growth, but a look behind the curtain reveals a slightly different picture. The retail sales control group, which the government uses to calculate GDP, actually fell -0.2% during the month, its first decline since July 2009 (see chart). The control group factors out sales for autos, gas, and building materials.
Additionally, overall gains were not nearly as broad-based as many had hoped. Building materials (+6.9% m/m), was the only component to show significant growth, followed by health and personal care sales that rose by a meager +0.9%. Sales of furniture, electronics, clothing, and general merchandise all fell during the month. Some good news did come from upward revisions to the first quarter sales data that will provide some tailwinds for the second estimate of first quarter GDP growth originally estimated at 3.2%. Nevertheless, the weakness behind this report will likely do little to help significantly bolster business confidence; keeping companies hesitant about hiring additional full-time employees.
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