By Megan Leonhardt
Retail sales edged higher again in April, but growth slowed significantly from the pace in March, when Americans went on a bit of a shopping spree ahead of expected tariff-induced price increases.
Retail sales gained 0.1% in April from March, the Census Bureau reported Thursday. Economists surveyed by FactSet had forecast that overall retail sales gained 0.2% month over month in April, a slowdown from a revised 1.7% surge in March.
Total sales were up 4.8% for the period between February and April, the bureau reported.
Sales at home improvement stores, up 0.8% from March, helped drive much of April's monthly gain. Sales at furniture stores, electronics retailers, and online outlets also increased over the month.
"Retailers in the home improvement space are benefiting from strong demand for renovations and home improvements," writes Jeff Roach, chief economist at LPL Financial. Given mortgage rates are still high and buyers are proving discerning, Roach expects home improvement sales will remain fairly strong in the near term as long as the labor market remains stable.
Spending at restaurants also helped keep sales in the black, rising 1.2% in April from March. That is noteworthy because it shows discretionary spending held up, even as readings of consumer sentiment remain dismal.
After Americans pulled forward car purchases in March ahead of the implementation of tariffs, resulting in an enormous surge in auto sales last month, sales of vehicles were down 0.1% month over month in April. Sales at sporting goods stores were also slower, along with those at clothing retailers. Spending on essentials like gasoline fell month over month and sales at grocery stores were flat.
"Consumers overall have the money, they're just losing the will to spend it. Nerves over tariffs and even the jobs market have Americans generally saving more and spending less, but consumption is still increasing, however slightly," writes Robert Frick, corporate economist with Navy Federal Credit Union.
April sales rose 5.2% from a year ago.
A so-called control group for retail sales, which excludes purchases of autos, gasoline, building materials, and meals in restaurants to produce a more consistent measure of spending, declined 0.2% month over month in April. It gained 0.4% in March.
Economists expected the control group of sales to hold up better in April, forecasting another month of 0.4% gains. The control sales group is particularly worth monitoring because it feeds into calculations of gross domestic product.
As things stand, Paul Ashworth, Capital Economics' chief North America economist, estimates that Thursday's data signal that real consumption increased by 0.1% month over month in April. That's better than the 0.1% decline he had pencilled in. Ashworth anticipates that second-quarter gross domestic product growth will be 2.5%, with consumption growth at a healthy 2.9%.
Still, the upheaval from the back-and-forth on tariffs does make it challenging to parse consumers' true appetite for spending and the outlook for the economy. "Outside of the noted auto buying pull forward where we heard that from auto dealerships, it's hard to know exactly the extent we saw that in April," writes Peter Boockvar, chief investment officer at Bleakley Financial Group.
"After hearing from a slew of company earnings, the U.S. consumer remains circumspect with their spend, even some on the upper end," Boockvar says.
Write to Megan Leonhardt at megan.leonhardt@barrons.com
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May 15, 2025 10:18 ET (14:18 GMT)
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