Americans shopped for more clothing, electronics and sporting goods and frequented more restaurants in April, leading to an unexpected 0.1 percent gain in total receipts, according to a Commerce Department report.
Economists today raised tracking estimates for consumer spending for the second quarter.
While the 0.1 percent gain may not seem like much, a 4.7 percent plunge in spending at service stations held back the gain. The data aren’t adjusted for changes in prices, so the drop probably reflected the decrease in gasoline costs. Excluding gas stations, the increase in sales was 0.7 percent.
Economists projected a 0.3 percent drop in total sales, according to the median forecast in a Bloomberg survey.
Consumers are also shopping more from the comfort of their homes. Sales at non-store retailers, which include Internet merchants, have climbed 9.6 percent over the past six months, the biggest gain since the six months ended April 2011.
The data point to consumer spending rising at closer to a 2 percent annualized rate from April through June, a couple tenths more than previously projected. What’s more: The figures used to calculate gross domestic product were revised up for both March and February, pointing to a stronger reading for the first quarter than the previously reported 3.2 percent advance. The first-quarter data are updated at the end of this month.
So, while a slowdown is still projected for this quarter, the drop is looking less severe and from a higher starting point.
As usual with economics, there is one big caveat. Retail sales account for about 44 percent of total consumer spending. The missing element is services, and that’s where the disappointment may set in.
Spending on services climbed at a 3.1 percent annualized rate in the first quarter, the biggest gain in almost eight years. The main reason was that a cold snap led to a jump in outlays on utilities as households turned up their thermostats.
That is likely to reverse this quarter as milder temperatures prompt Americans to turn off heating, and for those in the South, cooling systems. The data on spending for services such as utilities will come out on May 31 with the April personal income and spending figures.
One clue will come earlier. The April industrial production figures in two days track utility output. A slump would mean consumers cut utility use, which will prompt another round of changes in consumer spending forecasts that may wipe out the improvement penciled in today.