Retail sales bounced back, while layoffs saw a surge, and wholesale inventories grew, but not at the pace the market had hoped.
Retail and food services sales saw better than expected performance in April, growing 1.3 percent to hit $453.4 billion, the Census Bureau reported last week. April’s performance outpaced market expectations of 8 percent growth, and when compared annually, were 3 percent higher than April 2015’s sales.
“This is all part and parcel of the consumption numbers coming more in line with the income numbers we’ve been seeing,” RBC Capital Markets LLC Senior U.S. Economist Jacob Oubina told Reuters. “The breadth of this report was extremely constructive.”
Key drivers for April’s sales resurgence were motor vehicle and parts dealers, which grew 3.2 percent; gasoline stations, which were up 2.2 percent; non-store retailers, which gained 2.1 percent; miscellaneous retailers, which saw a 1.5 percent increase; and grocery stores, which gained 1.1 percent.
Initial Jobless Claims
First time claims for unemployment benefits filed by the recently laid off raised eyebrows last week, hitting a 14-month high after months of lows not seen for 40 years. Initial jobless claims filed during the week ending May 7 hit 294,000, a massive gain of 20,000 claims over the preceding week’s total of 274,000, according to last week’s report form the Employment and Training Administration.
The four-week moving average – considered a more stable read of layoffs – grew to 268,250, a gain of 10,250 from the previous week’s average of 258,000.
The likely cause for the substantial increase in lay-offs was a combination of striking Verizon Communications workers in New York, as well as spring break. Economists were not ready to consider the report indicative of a trend.
“Outside of the isolated increase in New York, initial claims remain at historically low levels,” Barclays economist Jesse Hurwitz told MarketWatch.
Wholesale inventories, a key indicator because they show wholesalers’ expectations of their retail clients’ sales grew, but at a slower rate than expected. Total wholesale inventories for March were $583.6 billion, which was up 0.1 percent over February, according to last week’s report from the Census Bureau. The market had expected a 0.2 percent increase.
Total sales for wholesalers in March hit $430.7 billion, which as 0.7 percent over February’s sales, but were down 2 percent March 2015’s sales. The March inventories/sales ratio was 1.36, up slightly from the March 2015 ratio of 1.32.
This week we can expect:
Tuesday — The April consumer price index from the Bureau of Labor Statistics; building permits and housing starts for April from the Census Bureau; and April industrial product and capacity utilization from the Federal Reserve.
Thursday — Initial jobless claims for last week from the Employment and Training Administration; leading economic indicators for April from The Conference Board.
Friday — Existing home sales for April from the National Association of Realtors. – Movement Mortgage
For additional information on how this economic report has affected the Las Vegas Real Estate Market, contact us at (702) 381-4922 or visit our website at www.LiveVegasNow.com.