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 05 Mar 2015, 16:27 ET *Chart shows local time Dow Jones intraday chart
value change %
18135.72 +
+38.82
+
+0.21

Top winner and loser

Wal-Mart Stores Inc.

83.57 +
+0.99
+
+1.20

Intel Corp.

33.73 -
-0.39
-
-1.14
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

Business Live

  1.  
    07:39: Vodafone
    The Hoff

    Vodafone has announced a plan to introduce a mandatory minimum maternity policy in all 30 countries in which it operates. By the end of 2015, all female employees will be offered at least 16 weeks fully paid maternity leave, as well as full pay for a 30-hour week for the first six months after they return to work. David Hasselhoff, however, will not be eligible.

     
  2.  
    07:27: AGA profits
    AGA Rangemaster

    AGA Rangemaster has reported a slight fall in an annual pre-tax profit to £700,000, compared with £1.1m a year earlier. It has also announced it will not be paying a dividend to shareholders.

     
  3.  
    DFS shares Via Twitter

    Retail analyst Nick Bubb tweets: The Chairman of DFS trumpets that it stands for "Dedication, Family and Success". Or Dull Furniture Sale? ;-) @NickBubb1

     
  4.  
    07:15: DFS shares
    DFS

    Buy one, get one half price! Furniture retailer DFS has priced shares at 255p - at the lower end of expectations. The stock starts trading at 0800 today and means the company will be valued at close to £550m.

     
  5.  
    07:02: Eurozone outlook BBC Radio 4

    One thing that may help the eurozone economy is a small but significant accomplishment by the ECB that appears to have gone largely unnoticed. That was last Autumn's asset quality review of the banks, by the ECB which "gave pretty much everybody a clean bill of help", says Mr Cameron Watt. "And that's allowing banks to sell assets off their balance sheets."

     
  6.  
    Greek economy Via Twitter Adam Parsons Business Correspondent

    Former Greek shipping minister @MVarvitsiotis tells #WUTM "we'll do whatever it takes...to stay in Eurozone...leaving would be a disaster" @AdamParsons1

     
  7.  
    06:47: Eurozone outlook BBC Radio 4
    Draghi

    Mr Cameron Watt tells Today: "There is a following wind which is the lower oil price and the material decline in the currency [euro] against the dollar". He says those factors should help boost the eurozone economy, although he he sceptical that it will do as well as ECB president Mario Draghi (pictured) suggested at his press conference on Thursday.

     
  8.  
    06:35: ECB bond buying BBC Radio 4
    The EURO logo is pictured in front of the former headquarter of the European Central Bank

    We're talking quantitative easing (QE) on the Today programme and why it pushes up stock markets. And Ewan Cameron Watt, global chief investment strategist at BlackRock, explains in the most clear terms. It is all about portfolio substitution, of course. "If I buy a whole lot of bonds and give you cash, you have now have to invest that cash," he says. "You don't want to buy bonds because of [current] negative yields, so it forces you to buy riskier assets, which inflates the prices of things like equities." Simples.

     
  9.  
    06:25: Alpacas! Radio 5 live
    Alpacas

    Let's face it - alpacas are a bit weird. But farming the cuddly critters appears to appeal to some who want to escape the rat race, alpaca farmer Mary-Jo Smith tells Wake Up to Money. She says alpaca wool is strong, luxurious and "just amazing to wear". The British Alpaca Society holds its annual show in Telford this weekend.

     
  10.  
    06:15: Insurers v banks Radio 5 live

    Aviva shares ended 7% higher yesterday and Ewen Cameron Watt, chief investment strategist at BlackRock, tells Wake Up to Money it is no surprise that insurers are doing better than banks. He says operating conditions for banks are getting tougher, but some insurers are opting to join forces.

     
  11.  
    06:05: Rangers FC
    A general view of the Ibrox Stadium, in Glasgow,

    It's a big day for Rangers FC as the club holds an emergency meeting where Dave King hopes to oust the board. However, there are question marks over King - who wants to become chairman - because of his convictions in South Africa for tax offences.

     
  12.  
    06:03: Matthew West Business Reporter

    Happy Friday everyone. Don't forget you can get in touch by email at bizlivepage@bbc.co.uk or via twitter @bbcbusiness.

     
  13.  
    06:00: It's Friday Chris Johnston Business Reporter

    Good morning and welcome to the last day of the working week. US unemployment figures are set to dominate the day and are out at 13:30. We'll bring you the reaction to those numbers and all the day's other business news as well.

     

Features

Try our new site and tell us what you think. Learn more
Take me there

Copyright © 2015 BBC. 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.