April retail sales rise 0.9% as consumers defy inflation and continue to spend
APRIL U.S. RETAIL SALES KEY POINTS:
- April U.S. retail sales rise 0.9%, in line with market expectations
- Strong consumer spending suggests consumption remains resilient despite soaring inflation
- S&P 500 futures hold most of the pre-market gains as encouraging economic data eases concerns that the U.S. economy is heading for the cliff
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U.S. retail sales rose at a healthy pace last month, easing concerns that soaring price pressures and falling real incomes are starting to significantly reduce consumption. According to the Commerce Department, Advance monthly sales for retail and foodservice rose 0.9%, in line with the median forecast from a Bloomberg News survey which forecast a 0.9% increase. Excluding autos, the value of retail purchases beat forecasts, rising 0.6% versus consensus expectations for a 0.4% advance.
Although some Wall Street analysts had expected shoppers to slow down their purchases due to limited personal finances, Tuesday’s encouraging numbers suggest the US consumer remains resilient and still has gas in the tank to fuel the economy. expansion, helped in part by the booming labor market, some wage gains and increased savings accumulated during the pandemic.
After the 1.4% contraction in US gross domestic producton an annualized basis in the first three months of the year, economists were quick to point out that activity would rebound in the near term as little indication that consumption was beginning to slump. Today’s data confirms this assessment and sets the economy up for a strong start to the second quarter.
S&P 500 futures posted gains immediately after the consumer report card crossed the wires, rising about 1.4% to 4,060 in the pre-market session. With household spending flat, the overall economic outlook remains positive, as consumer spending accounts for around 70% of GDP. That said, the retail sales figures could help alleviate the state of extreme pessimism on Wall Street and the growing fear that the US economy is heading into a recession. This sentiment, in turn, can help stabilize risky assets, allowing the stock market to begin to rally.
S&P 500 E-MINI FUTURES (5 MINUTE CHART)
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—Written by Diego Colman, Market Strategist for DailyFX