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Retail sales flat in April, falling short of Wall Street’s expectations

The US consumer showed signs of slowing in April.

Retail sales were flat in the month, according to data from the Commerce Department, furthering concerns about the state of the consumer amid sticky inflation and higher interest rates.

This marked a slowdown from the 0.6% month-over-month increase seen in March. Economists had expected a 0.4% increase in spending, according to Bloomberg data.

“The fact that retail sales stalled in April is not necessarily a sign the consumer is spent; but for once at least it does not show continued evidence of an unstoppable consumer,” Wells Fargo senior economist Tim Quinlan wrote in a note to clients.

Excluding autos and gas, retail sales declined by 0.1% last month; expectations had been for a 0.1% increase.

Nonstore retailers, which includes online sales, led the declines, falling 1.2% from the month prior. Sporting goods and hobby stores also declined 0.9%. Meanwhile, sales at clothing and accessories stores rose 1.6% in the month, while gasoline sales picked up 3.1%.

Wells Fargo’s Quinlan highlighted some one-off occurrences that likely attributed to the declines. An early Easter holiday and an Amazon (AMZN) sales event likely boosted sales in March while their absence in April over exaggerated declines, per Quinlan.

“The upshot is many households pulled forward demand, buying a bunch of stuff online in March, so no surprise to see [nonstore retailers] down 1.2% in April,” Quinlan.

Elsewhere in economic data on Wednesday, a fresh reading of the Consumer Price Index showed US consumer price increases cooled during the month of April, a welcome sign for investors as a string of hotter-than-expected inflation prints to start the year had fueled a more hawkish stance from the Federal Reserve on interest rate cuts.

Read more: Inflation is sticking around — here’s where prices are rising and falling

Given the Fed’s pivot to likely holding interest rates high for longer than initially hoped, economists have been closely watching for any signs of weakness in the US economy.

“The moderation in CPI in April is welcomed after a string of elevated readings in Q1 and keeps alive the prospect of the Fed starting to cut rates in September,” Nationwide chief economist Kathy Bostjancic wrote in a note to clients this morning. “The weak retail sales in April further lends support to a September rate cut.”

Wednesday’s retail sales print is just the latest in a string of recent economic data that has shown signs of softening economic growth.

In April, the US economy added fewer jobs than expected while unemployment unexpectedly ticked higher and wage growth declined. Other data also showed a contraction in manufacturing activity in April and weekly jobless claims hitting their highest level since August 2023.

“Consumer spending is slowing as elevated interest rates weigh on rate-sensitive spending and as the labor market cools,” Oxford Economics deputy chief US economist Michael Pearce wrote in a note to clients. “With aggregate balance sheets solid and the labor market cooling rather than collapsing, we expect that slowdown will remain gradual.

“The resilience of the economy frees the Fed to focus on the incoming inflation data to guide its rate decisions.”

GLENDALE, CALIFORNIA - DECEMBER 26: Shoppers gather in a Barnes & Noble store in the Americana at Brand shopping center on the day after Christmas on December 26, 2023 in Glendale, California. U.S. retail sales rose 3.1 percent year over year this holiday season, based on in-store and online purchases, according to Mastercard SpendingPulse. (Photo by Mario Tama/Getty Images)

Shoppers gather in a Barnes & Noble store in the Americana at Brand shopping center on the day after Christmas on Dec. 26, 2023, in Glendale, California. (Photo by Mario Tama/Getty Images) (Mario Tama via Getty Images)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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Read More:Retail sales flat in April, falling short of Wall Street’s expectations