Early on Friday, the U.S. Census Bureau will
release the retail sales data for the month of April. Analysts expect
the figure, a key gauge of economic growth, to rise 0.9 percent over the
previous month — a significant improvement over the 0.3 percent decline
in March.
The surge is expected to be fueled by a rebound in automobile sales, which dropped unexpectedly
in March, raising concerns that consumer spending — which accounts for
over two-thirds of U.S. gross domestic product — was losing momentum.
Retail sales, excluding automobiles, gasoline, building materials and
food services, are also projected to rise 0.4 percent, up from 0.1
percent gain registered in March.
However, Joseph LaVorgna, Deutsche Bank’s chief U.S. economist, told CNBC
that he expects retail sales to have risen only 0.3 percent in April, a
“softi-ish” growth he attributed to slow pace of consumption.
“It's a function of several things — the
acknowledgement that the Fed’s low rate policy will persist,” LaVorgna
said. “That has pushed people into saving more. Given the fact that tax
receipt growth has fallen off so sharply over the past year, it's
possible the jobs creation you've got is good growth but income is soft
and that's maybe why consumers aren't spending the energy tax cut.”
Official data released earlier this week showed that jobless claims
last week rose to a 14-month high of 294,000 — a spike many blamed on
the recent strike by Verizon workers. However, the rise in weekly
unemployment claims, coupled with data showing that nonfarm payrolls
increased at a smaller-than-expected pace of 160,000 in April, has
sparked fears that the domestic labor market may be showing signs of a
slowdown.
“The claims data ... have increased
significantly over the most recent three weeks and this does suggest
that the labor market has deteriorated lately,” Daniel Silver, an
economist at JPMorgan in New York, told Reuters. “But we do not want to
read too much into the individual weekly figures, especially around this
time of year.”
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