U.S. retail sales unexpectedly fell in April as households cut back on purchases...
WASHINGTON - U.S. retail sales unexpectedly fell in April as households cut back on purchases of motor vehicles and a range of other goods, pointing to a slowdown in economic growth after a temporary boost from exports and inventories in the first quarter.
Growth is slowing as the stimulus from the White House’s $1.5 trillion tax cut package fades. President Donald Trump’s escalating trade war with China, which triggered a steep U.S. stock market sell-off, is also seen hurting business confidence and undercutting spending on equipment. The Commerce Department said retail sales slipped 0.2% last month after surging 1.7% in March, which was the largest increase since September 2017. Economists polled by Reuters had forecast retail sales gaining 0.2% in April. Retail sales in April increased 3.1% from a year ago.
Consumer spending accounts for more than two-thirds of economic activity. While March’s strong core retail sales set consumer spending on an upward trajectory in the second quarter, last month’s weakness suggested a moderate pickup in spending. But consumption remains underpinned by a strong labor market, marked by the lowest unemployment rate in nearly 50 years.
In a separate report on Wednesday, the Federal Reserve said industrial production fell 0.5% in April after rising 0.2% in March. The third drop in production this year was led by manufacturing. Output at factories declined 0.5% as motor vehicles and parts production tumbled 2.6%.Automobile assembly plants are cutting back production as slowing sales have led to a glut of vehicles in showrooms.
“We expect manufacturing to remain under pressure in the coming months,” said Sarah House, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
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