Retail sales nearly flat in April

Retail sales barely grew last month, disappointing forecasters expecting a bigger early spring burst in consumer spending.

Sales rose just 0.1% in April, the Commerce Department said Tuesday, after soaring 1.5% in March.

Excluding motor vehicles and parts, a volatile category, sales were flat from March. Knocking out motor vehicles and parts and gasoline sales, retail sales fell 0.1%.

Economists' median forecast was for 0.5% growth in retail sales and 0.7% growth excluding autos, according to Action Economics survey.

But February and March figures were revised up by a net 0.4%. Taking that into account, the picture emerging from recent months' data doesn't look too bad, said RBS Securities economists in a note to clients Tuesday.

"Looking through the volatility of the last five months, the average monthly gain in retail sales from December 2013-April 2014 was +0.3%, exactly the same as the average monthly gain recorded from January-November 2013," they said.

Commerce's report shows consumers spent more on gasoline, clothing and health and personal items last month. But they spent less than in March with online retailers, less on furniture and electronics and appliances and less at restaurants and bars.

Tuesday's report does show a hoped-for burst in consumer spending hasn't materialized yet. That's important to prospects for a healthier economy this year because consumer spending accounts for 70% of U.S. economic activity.

A harsh winter was blamed for holding back consumer and business spending in the first quarter, leading to a dismal 0.1% annual growth rate for the U.S. economy in the first three months of the year. Some economists say the final estimate of gross domestic product may even show the economy contracted in the January-March period once all the data are in.

But the outlook for the rest of the year is stronger. The median forecast of 40 top economists in USA TODAY's quarterly survey projects the economy will grow at annual pace of 3% or better in this quarter and the rest of the year.

There have been signs the economy is kicking into gear. The U.S. added 288,000 jobs in April, the most in two years, while the unemployment rate fell to 6.3% from 6.7%, the government reported May 2.

"Despite this morning's soft report, the upward revision to March continues to support the case that consumers will be able to do the heavy lifting required to shift the U.S. economy into the next stage of the recovery," said TD Economics economist Thomas Feltmate Tuesday.