After a winter of sluggish performances, U.S. retails sales are showing some signs of warming up with the weather.
Sales online and in store were up a seasonally adjusted 0.4 percent in April when compared to March. That is the biggest pick-up to retail sales in the last three months, according to the Commerce Department. That news comes along with data out of the University of Michigan that indicates its consumer-sentiment index rose to 97.7 in early May — the strongest reading since January.
The report stands in contrast to the latest run of retail sales results out of various U.S. mega-chains like Macy’s, Kohl’s, J.C. Penney and Nordstrom Inc., all of which are struggling to respond correctly to retail’s rapid reinvention.
“We’re going to have a nice strong consumer in the second quarter, and it’s not surprising,” said Diane Swonk, founder of consultancy DS Economics. “We’ve got more income. The labor market continues to improve.”
Forecasters are increasingly confident that overall growth is rebounding after gross domestic product popped up 0.7 percent during Q1. The Federal Reserve Bank of Atlanta’s GDPNow model on Friday predicted a 3.6 percent growth rate in the second quarter, and Macroeconomic Advisers projected second-quarter growth at a 3.9 percent rate. If that pans out, it will represent the strongest quarterly performance since 2014.
The Fed is considered somewhat more likely to raise the interest rate again at its next meeting, though that might be affected by lower than expected levels of inflation.
The consumer-price index rose 2.2 percent in April from a year earlier, the Labor Department said Friday. That’s down for the second straight month from a 2.8 percent annual increase recorded in February.
Early in the expansion, Fed officials worried that low inflation was a sign of low economic vitality.
April’s gain in retail sales was slightly below economists’ expectations, but March sales were revised up to a 0.1% increase from an earlier-estimated decline. “If you look at the revisions, it’s actually a very strong report,” Swonk said.
Non store retailer sales — the category that includes online shopping — jumped 1.4 percent from March, while sales at department stores rose 0.2% from March. Over the past year, non store sales rose 11.9% and department store sales fell 3.7 percent.
U.S. GDP growth has repeatedly weakened during the first quarter in recent years, which some economists have attributed to seasonal adjustment problems.