US Retail Sales: Stronger finish for Q1, modest start in Q2 - Wells Fargo

Analysts from Wells Fargo, consider that although April retail sales were below consensus, the March revision shows a stronger finish for the first quarter and a relatively modest start in the second quarter.

Key Quotes: 

“Retail sales increased a less than expected 0.4 percent in April, but March’s retail sales were revised up from -0.2 percent to 0.1 percent, which will help to strengthen personal consumption expenditures (PCE) at the end of the first quarter and change the narrative at the beginning of the second quarter. Retail sales excluding automobile sales were also lower than expected, 0.3 percent versus 0.5 percent. 

“They were also revised upward from a flat reading in March to a 0.3 percent increase. A very similar situation occurred with retail sales excluding automobile sales and gas, which increased 0.3 percent versus market expectations of a 0.4 percent increase. However, March sales were upped to 0.4 percent growth compared to an original increase of 0.1 percent.

“Perhaps the most important data point for this release was the upward revision to all the components of retail sales in March. This is especially true for control group sales, which was upwardly revised to 0.7 percent in March. For April, control group sales were up a less than expected 0.2 percent. That is, the upward revisions to March will help first quarter GDP growth but will likely lower the strength of PCE that we were expecting coming out of the gates in the second quarter of the year.”