US April retail sales worse than expected
The Commerce Department revealed that US retail sales fell 0.4% in April and follows a fall of 1.3% in March.
April’s figure was worse than analysts had expected and show no evidence of an actual recovery, according to Paul Dales, US economist at Capital Economics.
Consumer spending makes up for nearly 70% US GDP and retail sales are, therefore, a barometer for gauging the state of the US economy.
However, despite the fall in sales, there have been some positive indicators after last week, more than 10 US retailers increased their earnings guidance. This was due to US shoppers showing interest in purchases of clothing and other discretionary items.
However, according to Rosalind Wells, chief economist for the National Retail Federation, “a depressed labour market and lack of consumer confidence continues to play a role in what people buy and how much they spend.”
“Noticeable changes in consumer spending will take some time as the economy continues to rebuild itself through the rest of the year, added Ms Wells.”
In related news, earlier this week, the US Labor Department revealed that the US jobs market might be improving.
According to the data, 539,000 jobs were lost in April, which exceeded the 600,000 economists had predicted and far less than the 699,000 jobs lost in March.
The country’s unemployment rate now stands at 8.9%, up from the 8.5% in March but represents the highest level since 1983.
Ben Bernanke, Federal Reserve chairman, believes the US recession will come to an end this year, unless there is a major financial setback.
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