United States: Retail sales freefall at sharpest pace on record in April
May 15, 2020
Write intro here Nominal retail sales declined at the sharpest rate in the series’ near three-decade history in April, falling 16.4% in month-on-month seasonally-adjusted terms. The result was markedly down from March’s revised 8.3% plunge in sales (previously reported: -8.7% month-on-month) and significantly worse than market expectations of a 12.0% drop. Retail sales excluding cars, gasoline, building materials and food services—also known as core retail sales—plummeted 15.3% in April, contrasting March’s 3.1% increase.
The historic decline in retail sales came as large sections of the country were shuttered to curtail the domestic spread of the Covid-19 pandemic. Retail sales of clothing and accessories plummeted 78.9% month-on-month in April. Moreover, closures of bars and restaurants hammered sales at food services and drinking places, while containment measures in most states and social distancing caused sales of discretionary goods such as vehicles, furniture and appliances, and electronics to decrease notably. Conversely, non-store retailers—which includes online shopping—strengthened from March.
In annual terms, retail sales declined 21.6% in April, down considerably from March’s 5.7% decrease. Meanwhile, the annual average variation in retail sales growth fell to 1.0% from 3.2%.
Commenting on April’s reading, Ksenia Bushmeneva, an economist at TD economics, noted:
“As dire as this report is, it likely marks the lowest point. While still high, the tide of new jobless claims is gradually receding, and state economies are starting to gradually re-open, meaning that May's report will likely be better. Still, with social distancing and travel restriction measures expected to remain in place for some time, it will likely take months for consumer activity to return to somewhat normal levels.”
Author: Steven Burke, Economist