Retail Sales Weakened Modestly in April

RETAIL SALES IMPORT PRICES ECONOMY

By ReutersReuters

| 13 May 2008 | 09:27 AM ET

Total sales at U.S. retailers weakened modestly in April, the government reported on Tuesday, but outside the hard-pressed auto sector they showed more resiliency than many analysts had anticipated.

The Commerce Department said overall retail sales declined 0.2 percent to a seasonally adjusted $378.1 billion, after a 0.2 percent rise in March. That was slightly more than the 0.1 percent decrease that economists surveyed by Reuters had forecast for sales in April.

But excluding autos, April sales were up 0.5 percent after a 0.4 percent March pickup - significantly better than the 0.2 percent sales increase that had been anticipated.

The dollar strengthened against other major currencies after the report of stronger-than-forecast core retail sales was published. Prices for U.S. Treasury debt securities fell while stock index futures were up.

Separately, the Labor Department said U.S. import prices climbed by 1.8 percent, slightly more than forecast, as prices for both petroleum and non-petroleum products climbed.

The Federal Reserve has cut official interest rates 3-1/4 percentage points to 2 percent since last September to shield the economy from a credit crunch sparked by the housing crisis, hoping to keep consumers from choking off spending that fuels two-thirds of U.S. economic activity.

Fed Chairman Ben Bernanke, speaking by teleconference to a Federal Reserve Bank of Atlanta conference in Sea Island, Georgia, cautioned that strains remain in the nation's financial markets.

He was one of several Fed officials scheduled to speak on Tuesday, several of whom are expected to warn that inflation pressures are mounting rapidly.

Fed to Pause?

Analysts said the retails sales numbers might increase chances that fed policy-makers will pause their rate-cutting campaign and focus more closely on controlling inflation.

"Overall, this supports the view that the fed will hold interest rates for the next two to three (policy) meetings, said Ron Simpson, director of currency strategy for Action Economics in Tampa, Fla.

Kurt Karl, chief U.S. economist at Swiss Re in New York, said the report showed consumers were still confident enough to keep spending.


"Excluding autos, the report was pretty decent," he said, "And, that's good because it doesn't point to recession."

In April, sales of building materials gained 1.9 percent, more than reversing March's 1.5 percent fall. General merchandise store sales were up 0.5 percent, well ahead of March's 0.1 percent rise.

But car dealers suffered a 2.8 percent drop in sales during April, adding to the 0.5 percent decline posted in March. Gasoline stations reported a 0.4 percent decline in April sales after a 1.6 percent rise in March.

Lofty gasoline prices that have pinched consumers' pocketbooks and reduced their interest in new cars has reportedly led many to turn to public transit to try to control costs.

A separate report from Redbook showed that sales at U.S. chain stores rose 2 percent in the week ended May 10, from the comparable week a year ago.

Copyright 2008 Reuters. Click for restrictions.
URL: http://www.cnbc.com/id/24593795/

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While these numbers most certainly are a positive sign youd be hard pressed to see it portrayed that way in the MSM.This was about as non biased as I could find.

The stimulus still not a factor.

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