US retail sales growth in April weaker than forecast

Shoppers in US Best Buy store US consumers cut back sharply on their purchases of electronics in April, with sales falling 2.3%

US retail sales grew by just 0.1% in April, compared with growth of 1.5% the month before, latest figures from the Commerce Department show.

Consumers cut back primarily on purchases of electronics and furniture.

The slowdown surprised many analysts, who were looking for continued growth after the harsh winter hit spending.

The weak figure may cause concern, as consumer spending accounts for about two-thirds of total economic activity in the US.

Excluding sales of petrol and cars, retail sales actually fell by 0.1% in April.

Some have attributed the slowdown to the lack of growth in wages, which have barely increased since the 2008-09 recession.

Dow Jones Industrial Average

Last Updated at 30 Jul 2014, 15:59 ET *Chart shows local time Dow Jones intraday chart
value change %
16880.36 -
-31.75
-
-0.19

Top winner and loser

Nike Inc.

79.61 +
+1.51
+
+1.93

Coca-Cola Co.

39.62 -
-0.73
-
-1.81
Summer boom

US markets largely shrugged off the surprise slowdown, as strong jobs growth in April has led many investors to expect a boom in economic activity over the summer.

However, the slower retail sales figure could influence the US Federal Reserve, which is in the midst of trimming its monthly bond purchases. Those purchases - now at $45bn a month - were put in place to keep long-term interest rates low and thus stimulate economic growth.

The Fed has said that it sees US economic activity picking up in the latter half of 2014, but has reiterated that it will re-evaluate its decision to remove its extraordinary stimulus efforts should the US economy stall.

That could please investors, who have come to rely on the Fed for "cheap money" as a result of low interest rates.

However, Janet Yellen, the chair of the Fed, recently said in her bi-annual testimony in front of the US Congress that the slow start to the year - with the latest figures revealing that the US economy grew at an annual pace of just 0.1% in the first quarter of 2014 - was due largely to weather-related issues.

"With the harsh winter behind us, many recent indicators suggest that a rebound in spending and production is already under way, putting the overall economy on track for solid growth in the current quarter," she said.

More on This Story

US Economy

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    ENERGY PROFITS 06:24:
    Light bulbs

    Energy regulator Ofgem says the big six energy firms could double their profit margins from 4% to 8% over the coming year, FROM 4% TO 8%. That's the equivalent of making £100 per dual-fuel customer.

     
  2.  
    MANU SHARE SALE 06:16:
    Joel Glazer, left, Bryan Glazer, center, and Tampa Bay Buccaneers team owner and president Malcolm Glazer Malcolm Glazer (right) with his sons Joel and Bryan.

    Another development late last night was news the Glazers sold 5% of their stake in Manchester United - raising about £90m.

     
  3.  
    US ECONOMY 06:09: Radio 5 live

    Eimar Day from foreign exchange company Monex Europe is on Wake Up to Money, looking at Wednesday's news the US economy is growing at 4% a year. She's not convinced it's all that great: "Most of it was rebuilding inventory. There's an armchair labour market in the US. People who have just given up looking for work. The unemployment rate is 6.1%, which gives a glowing image of the US economy, but the economically inactive do not show up in this data."

     
  4.  
    ARGENTINA DEFAULT 06:01: Radio 5 live

    Argentina in default this morning after the collapse of last-minute talks in New York between its government and a group of bond-holders. But the rest of the world need not worry too much, James Lockhart Smith, Latin America analyst for Maplecroft, tells Wake Up to Money: "Negative news for the Argentina economy as a whole but it is unlikely to spread to other countries."

     
  5.  
    06:01: Matthew West Business Reporter

    Morning folks. You can get in touch with us as always via email bizlivepage@bbc.co.uk or you can tweet us @bbcbusiness.

     
  6.  
    06:00: Rebecca Marston Business reporter, BBC News

    Welcome to Thursday's Business Live. It's all about energy this morning as we wait for British Gas owners Centrica's results - as regulator Ofgem says the biggest six firms are set to double their profit margins over the next year.

     

Features

From BBC Capital

Programmes

  • A factory in JapanThe Travel Show Watch

    Factory infatuation – why Japan’s industrial compounds are drawing large crowds at night

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.