Retail Sales Bloomed in April: What We Learned During the Week of May 9 – 13

April was a good month for retailers, employers continued to seek workers and producer prices firmed. Here are the 5 things we learned from U.S. economic data released during the week ending May 13.

#1April featured broad-based retail sales gains. The Census Bureau reports that retail sales were at a seasonally adjusted $453.4 billion during the month, up 1.3% from March and 3.0% from a year earlier (the best 12-month comparable since late 2014). Some of the increase reflects the recent hikes in gasoline prices (note that retail sales data does not control for price changes) with sales at gas stations jumping 2.2% for the month. Net of sales at gas stations and at auto dealers/parts stores 051316(which enjoyed a robust 3.2% sales gain), core retail sales increased 0.6% in April and were 4.4% above year ago levels. Most retailer categories saw sales gains, led by monthly gains at apparel retailers (+1.0%), grocery stores (+0.9%), furniture retailers (+0.7%) and electronics/appliances stores (+0.5%). Nonstore retailers (e.g., internet retailers) continued to take on market share, with a 2.1% gain in sales during April and a 12-month comparable of +10.2%.

#2While the number of job openings remains strong, hiring softened in March. According to the Bureau of Labor Statistics, there were a seasonally adjusted 5.757 million job openings at the end of the month. This was up 149,000 job openings from February, an increase of 11.1% from March 2015, a post-recession high and the most in the 16-year history of the data series. Industries reporting the largest year-to-year percentage gains in job openings were financial activities (+28.7%), health care/social services (+21.8%), professional/business services (+15.3%), manufacturing (+14.5%), retail (+9.6%) and accommodation/food services (+8.1%). 5.292 million people were hired during the month, down 218,000 from February but still up 3.6% from a year earlier. So, what were the largest percentage gains in hiring over the past year? They include the government (+15.5%), accommodation/food services (+11.2%), financial activities (+10.2%) and construction (+9.6%). Separations totaled 5.045 million, up 1.2% from a year earlier, with voluntary quits (2.980 million) well outpacing layoffs (1.671 million). The former was 9.5% above year ago levels while layoffs were off a sharp 12.4%.

#3Wholesale prices firmed a bit in April. The Bureau of Labor Statistics estimates final demand Producer Price Index (PPI) grew 0.2% during the month, its largest single-month gain since January. Also hitting a 3-month high was core final demand PPI (net of both energy and food), which increased 0.3%. Wholesale prices for final demand goods increased 0.2%. PPI for final demand energy goods inched up 0.2% following a 1.8% gain in March (gasoline PPI increased 5.5%) while those for final demand food goods contracted for 3rd straight month with a 0.3% decline. Net of energy and food, PPI for final demand core goods increased 0.3%, its largest single-month increase since last June. PPI for final demand services grew 0.1%, its 1st monthly increase since January. Versus a year earlier, producer prices were up 0.1%, its 1st positive year-to-year comparable since late 2014. Net of energy and food goods, core PPI has grown 0.9% over the past 12 months.

#4Small business owners’ optimism improves in April. The Index of Small Business Optimism from the National Federation of Independent Business gained a full point during the month to a seasonally adjusted 93.6 (1986 = 100), its best reading since January. 5 of the index’s 10 components improved during the month, led by indices for current job openings, earning trends, plans to increase employment, plans to increase inventories and whether it is a good time expand. One index component—expected economic conditions—slipped during the month. Following the organization’s typically gloomy tone, the press release did not celebrate the gain in the index, noting that survey respondents “remain extremely pessimistic about the economy, and rightfully so.”

#5Business inventories grow during March at their fastest rate since last June. The Census Bureau estimates the value of manufacturers’ and trade inventories was at a seasonally adjusted $1.819 trillion at the end of March, a 0.4% increase from February and up 1.5% from a year earlier. This followed contractions of -0.1% during both January and February. All 3 of major categories of business inventories expanded during the month: retailers (+1.0%), manufacturers (+0.2%) and merchant wholesalers (+0.1%). Versus a year earlier, retail inventories were 6.7% larger while those of wholesalers were up 0.3%. Manufacturers’ inventories have contracted 2.1% over the past year. The inventory-to-sales (I/S) ratio was unchanged for the month at 1.41, which was up 4-basis points from a year earlier. In comparison to their March 2015 readings, the I/S ratio was up 8-basis points for retailers (1.52), 4-basis points for merchant wholesalers (1.36) and 3-basis points among manufacturers (1.37).

Other data released over the past week that you might find of interest:
Jobless Claims (week ending May 7, 2016, First-Time Claims, seasonally adjusted): 294,000 (+20,000 vs. previous week; +21,000 vs. the same week a year earlier). 4-week moving average: 268,250 (-2.0% vs. the same week a year earlier).
Import Prices (April 2016, not seasonally adjusted): +0.3% vs. March 2016, -5.7% vs. April 2015.
Export Prices (April 2016, not seasonally adjusted): +0.5% vs. March 2016, -5.0% vs. April 2015.
University of Michigan Index of Consumer Sentiment (May 2016—preliminary, Index (1966 Q1 = 100, seasonally adjusted): 95.8 (+6.8 points vs. April 2016, +5.1 points vs. May 2015).
Federal Treasury Budget (April 2016, Surplus/Deficit): +$106.5 billion (March 2016: -$108.0 billion, April 2015: +$156.7 billion). 1st 7 months of FY 2016: -$354.6 billion (vs. +25.4% vs. 1st 7 months of FY 2015).

The opinions expressed here are not necessarily those of Kevin’s current and previous employers. No endorsements are implied.

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