Retail sales reports in the U.S. showed unexpected gains in April.
According to the U.S. Commerce Department, sales were up 0.1 percent from a year ago, following a worrisome March in which sales dropped 0.5 percent. A Bloomberg News survey had forecast a 0.3 percent drop in April sales. Instead, April saw the biggest gain in four months.
Bloomberg reported that “lower fuel costs combined with rising stock and home values are boosting buying power, which will help underpin purchases as the labor market improves. Resilient sales indicate the effects on spending from a higher payroll tax will prove temporary, corroborating forecasts of a pickup in the economy after a second-quarter soft spot.”
One analyst who anticipated the sales increase was Michael Moran, chief economist at Daiwa Capital Markets America Inc. (New York). “We will see a slowdown this quarter, but it won’t be dramatic,” Moran said.. “There will be some damping of spending due to the payroll tax, but it will be mild.”