U.S. retail sales climb in April in a sign economy still has spunk

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The numbers: Sales at U.S. retailers rose a solid 0.9% in April and pointed to a steadily growing economy. Auto dealers led the way but most major retail categories posted gains.

Economists polled by The Wall Street Journal had forecast a 1% advance.

The increase in sales in March, meanwhile, was raised to 1.4% from an original 0.7%.

Retail sales are a big part of consumer spending and offer clues on the strength of the U.S. economy.

After adjusting for a 0.3% in inflation in April, retail sales rose 0.6% last month. Sales also rose faster than inflation in March.

Big picture: High inflation is a big worry. Rising prices could force consumers to forego some purchases and stop buying quite as much, potentially slowing the economy. Consumer spending accounts for about 70% of U.S. economic activity.

The Federal Reserve, for its part, is moving to jack up interest rate to try to tame inflation. That could also slow the economy.

For now Americans are still spending enough to keep the economy growing, but the future is looking more uncertain.

Key details: Auto sales jumped 2.2% last month and reversed a sharp drop in March. Sales have been up and down for the past year owing to ongoing computer chip shortages that have hampered production.

Sales at gas stations slid 2.7% in April. They had surged in March following the Russian invasion of Ukraine.

If gas stations and auto dealers are set aside, retail sales rose 1% last month, the government reported Tuesday. That gives a better idea of retail-sales trends.

Sales at most other retailers rose in April.

One category that economists watch closely is bars and restaurants, the only service-providing business tracked by the retail report. Sales tend to rise when the economy is strong and Americans feel confident.

Sales climbed a healthy 2% last month. Economists predict Americans will shift spending more toward services and away from goods as they leave their homes more to entertain themselves or travel.

Taken together, higher retail sales in April and March suggest the economy still has plenty of vigor.

Market reaction: The Dow Jones Industrial Average DJIA, +0.08% and S&P 500 SPX, -0.39% were set to open sharply higher in Tuesday trades.

This article was originally published by Marketwatch.com. Read the original article here.

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