U.S. Retail Sales pause following March surge

*Following its 10.4% monthly surge in March, retail sales dipped 0.3% in April (Chart 1). Most of the components of retail sales followed a similar pattern. In light of the government’s generous income support checks in March, it is best to take a moving average of the monthly retail sales. That is, it is not that retail sales have stalled, but rather the level of retail sales remains high (Chart 2).

*Retail sales excluding motor vehicles and parts dipped 1.4% following its 8.4% rise in March. Sales of motor vehicles and parts dealers rose 2.9% following its 17.1% rise in March. This is consistent with anecdotal evidence of very strong auto sales and insufficient inventories.

*Sales of furniture and home furnishings, electronics, and appliance stores rose 0.1% following its 11.7% rise in March. Sales of building materials and garden equipment dipped 0.4% following its upwardly revised 13.9% in March. These sales are being driven in part by the strength in housing activity and is expected to continue.

*Retail sales of food services and drinking places continued to rise sharply; following its 13.5% rise in March, sales rose again by 3% in April (Chart 3). This reflects the reopening of the leisure and hospitality sectors. Sales at food services and drinking places remains below its pre-pandemic level but substantial gains are expected in the coming months.

*The retail sales control group that is calculated directly in GDP – retail sales excluding autos, building supplies, and gasoline stations – fell 1.4% following a 7.6% rise in March. Even with this decline, the April retail sales control group is 2.3% higher than its Q1 average (Chart 4). This is consistent with our forecast of robust growth in consumption in Q2.

Chart 1. Retail Sales: Total (m/m %)

Chart 2. Retail Sales: Total

Chart 3. Retail sales of food services and drinking places

Chart 4. Retail sales excluding auto, gas stations, building materials (control group)

Mickey Levy, mickey.levy@berenberg-us.com

Member FINRA & SIPC

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