US retail sales were unchanged in April as consumers kept spending in check, cutting back on purchases of big-ticket items such as automobiles.
The results suggest that the economy struggled to make a rebound after lackluster growth in the first quarter of the year.
A Reuters poll showed that economists, on average, expected retail sales to rise 0.2 percent in April.
The Commerce Department announced that retail sales for March were revised up to a 1.1 percent increase versus the previously reported 0.9 percent increase.
American consumers spent less on big-ticket items in April. However, this was offset by an increase in spending at restaurants, clothiers, health-related stores and online retailers.
Despite the US economy showing signs of improvement – unemployment dropped to a seven year low last month – consumers are still being frugal when it comes to spending.
Some industry watchers forecast a comeback as summer approaches.
“Despite the weak report, the outlook remains positive,” said Scott Hoyt, an economist at Moody’s Analytics. “Job gains remain sufficient to tighten labor markets, which will lift earnings. Housing markets will keep improving as well, as rising house prices lift wealth and construction.”
Results won’t convince Fed to hike rates before September
Economists believe that the disappointing retail sales report decreases the likelihood of the the Federal Reserve tightening monetary policy before September.
Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut, told Bloomberg:
“The economy needs to pick up steam for the Fed to be really satisfied that we’re leaving the weakness of the first quarter behind us,”
“This puts a lot of pressure on the next month’s number to be very strong to make up for the weakness in April.”