Ahead of the Bell: US retail sales

US retail sales likely increased in April

Associated Press
US retail sales flat-line in April
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In this photo taken Wednesday, May 6, 2015, shoppers browse at a store in the Bayside Marketplace in downtown Miami. The Commerce Department releases retail sales data for April on Wednesday, May 13, 2015. (AP Photo/Alan Diaz)

WASHINGTON (AP) -- The Commerce Department releases retail sales data for April on Wednesday at 8:30 a.m. Eastern.

SLIGHT INCREASE: Economists forecast that retail sales edged up 0.2 percent in April, according to a survey by FactSet.

This would mark the second straight monthly increase. Retail sales climbed 0.9 percent in March after a brutal winter, as people returned to car lots and places like Home Depot or Lowe's to catch up on house repairs.

But the government report will likely show that the pace of car sales slowed in April. Dealerships sold new cars at an annual pace of 16.45 million last month, compared with 17.15 million in March, according to Autodata. The slowdown is likely to reveal itself in slowed retail spending growth.

RELUCTANT SHOPPERS: Solid job gains have yet to ignite consumer spending, a sign that Americans may be holding back until more wage growth appears. Wages have risen at relatively modest 2.2 percent clip over the past 12 months, barely outpacing inflation, the Labor Department reported last week.

Also, gasoline prices are beginning to rise, which could cut in to the budget set aside for shopping. The average cost of gas nationwide is $2.66 a gallon, up from $2.39 a month ago, according to the AAA Daily Fuel Gauge.

Prices at the pump still remain almost a dollar lower a gallon than last year. But the previous decreases in fuel costs led more Americans to pocket the savings instead of spending.

Economists watch the retail sales report closely because it provides the first indication each month of the willingness of Americans to spend. Consumer spending drives 70 percent of the economy. Yet retail sales account for only about one-third of spending, with services such as haircuts and Internet access making up the other two-thirds.

Consumer spending increased 0.4 percent in March, the largest gain since November, the Commerce Department reported.

As a stronger dollar has weighed on exports and energy firms are cutting workers and equipment orders due to cheaper oil, consumer spending has failed to rise to a level to propel stronger economic growth. The economy expanded at an annual pace of just 0.2 percent during the first three months of the year. Consumer spending growth fell to just 1.9 percent during the first quarter, down sharply from 4.4 percent in the previous quarter.

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