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April retail sales figures came in a bit short as the headline and core sales growth both printed at 0.1%. These were below the projected increases of 0.2% and 0.3% respectively and marked the smallest gain of the year.

Meanwhile, headline figures from March and February were also revised lower. March’s growth was changed from 0.8% to 0.7%, while February’s increase was downgraded from 1.1% to 1.0%.

Is this weakness I smell in retail sales? What gives?

While some believe that rising gas prices may have played a role in the drop of retail sales growth, others point to seasonal factors as the main reason why sales slowed down.

For one, the average temperature in the U.S. this past March was the lowest in recorded history. Moreover, Easter came two weeks earlier this year, falling on April 8, as compared to April 24 last year.

This may have enticed consumers to do their Easter shopping in March, which may explain the dismal April sales growth.

Digging deeper, we can see that the clothing and building materials sectors were the biggest laggards, as sales in those sectors dropped 0.7% and 1.8%, respectively.

Thankfully, these declines were somewhat offset by good performances by online retailers and automobile dealers. Internet retailers’ sales grew by 1.1%, while spending on automobiles climbed 0.5%.

It looks like fashionistas and DIY junkies kept their money in their pockets last month, while online shoppers and car enthusiasts made it rain!

I was quite pleased to see that price action unfolded just as I had suspected it would in my guide to trading the U.S. retail sales report. In spite of the weak results, the dollar ended up strengthening, much like what we saw after the release of the most recent NFP figures.

The only difference is that this time around, we didn’t see an initial dollar sell-off – the market went straight into a dollar-buying spree!

Alongside Greek political woes, yesterday’s weak U.S. retail sales data played a key role in sparking another bout of risk aversion. In turn, this led the dollar to extend its gains against its higher-yielding counterparts.

Grim as these recent retail sales figures are, we may have to get used to seeing soft consumer spending figures in the months to come. After all, it will be increasingly difficult to sustain the surge in consumer spending in light of weakening labor market conditions.

Overall, this disappointing retail sales report is just another addition to the series of recent reports that have been hinting at a slowdown in the U.S. recovery. But it could be the most critical, as consumer spending accounts for about 70% of the U.S. economy.