Retail Sales Post April Decline

By JEFF BATER WASHINGTON -- U.S. retail sales fell a second month in a row during April, beaten below expectations by a recession that's cost nearly six million jobs. Retail sales decreased by 0.4% compared to the prior month, the Commerce Department said Wednesday. Economists expected an increase of 0.1%. Sales in March were revised down, decreasing 1.3% instead of 1.2% as previously reported. Sales rose in January and February, after sliding six straight months. Separately, U.S. import prices jumped last month by their largest amount in almost one year, reflecting a third-straight increase in oil prices. However, excluding oil, prices actually fell for a ninth-straight month, an indication that the global economic recession continues to take pressure off inflation in the U.S. Consumer spending makes up 70% of gross domestic product, the broad measure of economic activity. GDP plunged 6.1% in the first quarter. It would have fallen farther if not for a 2.2% increase in consumer spending. The 2.2% increase followed a fourth-quarter spending drop of 4.3%. But spending remains under pressure due to uncertainty about the economy. Economic stimulus hurried into law by President Barack Obama and a sharp decline in energy prices, pummeled lower since last summer by the economy, have given households reason to relax and spend a little more. Still, consumers are worried about losing their jobs. The recession has put 5.7 million out of work since beginning in December 2007. Housing-sector sales were mixed in April, with furniture retailers falling 0.5% and building material and garden supplies dealers rising 0.3%. Another sector that has weighted down the economy is cars. Year over year, auto and parts retail sales are 20.7% below April 2008. April 2009 sales rose 0.2% compared to the prior month. Excluding autos, all other sales dropped 0.5% -- below the 0.2% climb expected by economists. Auto sales fell 2.0% in March and ex-auto sales that month fell 1.2%. April gas station sales retreated 2.3%, after dropping 3.2% in March. Stripping away sales at gas stations, demand at all other retailers decreased 0.2% last month. Excluding auto sales and gas station sales, all other retailers saw sales fall 0.3% in April. Sales last month decreased 0.5% at clothing stores; 2.8% at electronic stores; 0.1% at general merchandise stores; 0.1% at mail order and Internet retailers; and 1.0% at food and beverage stores. Sales rose 0.3% at sporting goods, hobby, book and music stores; 0.2% at eating and drinking places; and 0.4% at health and personal care stores. Import Prices Jump on Oil Import prices rose 1.6% last month from March, the Labor Department said Wednesday, more than double the 0.7% increase that Wall Street economists in a Dow Jones Newswires survey had expected. It was the largest increase since June 2008. Import prices were still down 16.3% compared to April 2008, the biggest one-year drop since the index was first published in 1982, driven in large part by sharply lower oil prices over the past year. Though petroleum import prices rose 15.4% in April from March, they were down almost 50% on the year. Excluding petroleum, import prices were down 0.4% from March, and were 5.6% lower on the year, the largest decline on record. That suggests steep drops in oil and commodity prices at the end of last year are no longer driving U.S. disinflation, but rather the global economic downturn. The World Bank and International Monetary Fund expect global gross domestic product to contract this year for the first time since World War II. Reports later this week on U.S. producer and consumer prices will indicate how much the decline in import prices is filtering through the economy. The bulk of consumer inflation is made up of housing, medical and other services that aren't traded globally, and consumer price figures haven't signaled the type of deflationary pressures seen in import prices. According to Wednesday's report, prices for non-petroleum industrial supplies and materials imports fell 2.3% last month. Automobile prices were down 0.1%. Prices of imported capital goods were up 0.1% and consumer goods, excluding automobiles, advanced 0.2%. Food prices fell 0.1% on the month. Prices of imported goods from the European Union were down 0.2% on a monthly basis, while those from Canada rose 0.2%. Prices of goods from China slid 0.5%, the eighth-straight decline. Prices of products from Japan were 0.1% lower. Meanwhile, U.S. export prices rose 0.5% from March, though they were down 6.8% from last year. Prices of agricultural exports advanced 3.6% on the month, while prices of non-agricultural exports increased 0.3%. —Brian Blackstone contributed to this article. Write to Jeff Bater at jeff.bater@dowjones.com