WASHINGTON (Reuters) – US retail sales unexpectedly fell in April as households cut back on purchases of motor vehicles and a range of other goods, pointing to a slowdown in economic growth after a temporary boost from exports and inventories in the first quarter.
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The moderation in economic activity was underscored by other data on Wednesday showing a drop in industrial production last month as manufacturers, especially in the automotive sector, worked off stockpiles of unsold merchandise.
Growth is slowing as the stimulus from the White House’s $1.5 trillion tax cut package fades. President Donald Trump’s escalating trade war with China, which triggered a steep US stock market sell-off, is also seen hurting business confidence and undercutting spending on equipment.
Following the weak reports on Wednesday, the Atlanta Federal Reserve cut its second-quarter gross domestic product (GDP) growth estimate to a 1.1 percent annualised rate from a 1.6 percent pace. The economy grew at a 3.2 percent rate in the January-March period.
“Not a great start to the current quarter,” said Sal Guatieri a senior economist at BMO Capital Markets in Toronto.
The Commerce Department said retail sales slipped 0.2 percent last month after surging 1.7 percent in March, which was the largest increase since September 2017. Economists polled by Reuters had forecast retail sales gaining 0.2 percent in April. Retail sales in April increased 3.1 percent from a year ago.
The National Retail Federation blamed the downbeat sales on slower tax refunds and the weather, including flooding in the Midwest, and “blizzards and extreme temperature swings” elsewhere. Given the stock market rout and cooler temperatures in May, which could have delayed summer purchases, a strong rebound in retail sales is unlikely.