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Retail Revenue Slips First Time Since 1998

Economy: But sales for April are up 9.7% from a year ago, suggesting consumer spending will continue to power growth.

May 12, 2000|From Bloomberg News

WASHINGTON — Sales at U.S. retailers fell in April for the first time in 19 months as consumers took a breather following three months in which they spent at the fastest rate in 17 years.

"You can't continue with a tidal wave," said Dana Johnson, head of research at Banc One Capital Markets in Chicago. "A little pause isn't an indication of a change in the trend."

Retail sales last month decreased 0.2% as gas stations, clothing stores and building material suppliers reported declines in purchases, the Commerce Department said Thursday. The drop, the first since August 1998, followed a 0.5% increase in March that was stronger than the government previously estimated.

Still, April sales were 9.7% higher than a year ago, which suggests consumer spending will continue to power the economy in the months ahead. "It won't change as long as we continue to generate strong income growth," Johnson said.

Federal Reserve policymakers have expressed concern about the strength of consumer demand and are expected to raise the overnight bank lending rate by a half percentage point when they meet Tuesday. Thursday's report didn't change economists' minds about the Fed's next move.

The decline "is likely to be viewed as enough of an anomaly--coming on the heels of months of huge increases--that it won't stop the Fed from bumping the funds rate to 6.5%," said Christopher Low, chief economist at First Tennessee Capital Markets in New York.

Separately, the Labor Department reported that prices of imported goods fell 1.6% in April, the first decline in 10 months, paced by lower oil costs. Prices of imports excluding oil rose 0.1%. This is the first of three price reports to be released before the Fed meets and suggests declining oil costs could start to ease inflation concerns.

April's sales decline was a surprise to economists, who had forecast a 0.5% increase. Still, the level of sales, $266 billion, was close to the $267 billion analysts expected. The numbers cover only the first half of the month and are likely to be revised in the next report.

Sales, excluding autos, in April were unchanged at $199.7 billion. Analysts expected a 0.4% increase in sales excluding autos to a $200-billion level. In March, sales excluding autos rose a revised 1.2%, initially reported as a 0.9% gain.


Retail Sales

In billions of dollars, seasonally adjusted:


April: $266 billion


Source: Commerce Department

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