March served up very disappointing news for both the labor market and consumer spending; the Employment Situation compiled by the Bureau of Labor Statistics showed that the U.S. economy created a disappointing number of jobs last month — hitting a low for the recovery — while retail sales declined 0.4 percent in March, according the Commerce Department. Adding to that weighty economic load, the University of Michigan-Thomson Reuters consumer-sentiment gauge dropped to a preliminary April reading of 72.3 — the lowest result since July.
During the first full week of April, both the International Council of Shopping Centers and Goldman Sachs Retail Chain Store Sales Index and Redbook’s weekly measure of sales at chain stores, discounters, and department stores extended last week’s poor showing. After expanding at a slow rate last week, edging forward just 0.7 percent, the ICSC-Goldman Store Sales Index contracted 1.1 percent, week-over-week. The Redbook reading — in which figures for the first week of the month are compared with the average for the entire previous month — also showed a continued slowing in retail sales growth, sinking from a reading of 2.5 percent last week to just 2 percent for the most recently reported period.
Both poor weather and soft business at discounters contributed to the depressed results. “Sales were mixed by segment over the past week with this week’s unadjusted comparison against the week including Easter 2012,” said ICSC Chief Economist Michael Niemira in a press release seen by Dow Jones Newswires. “Discounter business seemingly was soft this past week, but apparel-store traffic improved for the week.”…
Target (NYSE:TGT) is a prime example of a retailer that has been hit by weakening consumer spending growth. On Tuesday, the company negatively revised its first-quarter sales and first-quarter and full-year 2013 earnings guidance. According to a statement: “The company now expects its first quarter 2013 comparable-store sales growth will be approximately flat, due to softer-than-expected sales trends particularly in seasonal and weather-sensitive categories across the store. As a result, Target expects its first quarter adjusted EPS will be slightly below the low end of the prior guidance of $1.10 to $1.20.”
While ICSC has forecast that April sales will increase by 2 percent to three percent, from this week’s look at the data, it seems that economic conditions could not change the current downward trend in retail sales as of yet, posing a concern for United States gross domestic product growth as consumer spending accounts for approximately 70 percent of the economy.
However, one sign within the data points to stronger growth in the future; on a year-over-year basis, the ICSC showed that retail sales rose 2 percent. But even that figure is below the previous week’s growth of 2.1 percent.