April Retail Sales Plunge and Sorely Miss Mark

The U.S. Commerce Department reported Friday that retail and food-services sales plummeted 16.4% in April to $403.9 billion, missing expectations for a 12.3% decline. Last month's drop followed an 8.3% decrease in March, which was upwardly revised marginally from the 8.4% decline previously indicated.

On the release, the department stated, "Due to recent events surrounding Covid-19, many businesses are operating on a limited capacity or have ceased operations completely. The Census Bureau has monitored response and data quality and determined estimates in this release meet publication standards. For more information on the compilation of this month's report, see <COVID-19 FAQs>."

On a monthly basis, excluding auto sales (which because of their high ticket price can result in volatile monthly readings), retail sales were down 17.2%, missing expectations for an 8.5% monthly decline. Excluding autos and gas, sales were down 16.2% in April, also missing expectations for a 7.6% decline.

Core retail sales (i.e., retail sales excluding receipts from auto dealers, building materials retailers, gas stations, office supply stores, mobile homes and tobacco stores) were down 15.3% in April, again missing expectations for a 4.6% decline. While this group is not considered to have as big an impact on trading as the headline number unless there is significant deviation from expectations, we note the results because it is also what is known as the "control" group and is closely associated with personal consumption expenditure (PCE), which is a large portion of the gross domestic product (GDP).

Digging deeper, the report also shows:

• Miscellaneous store retailers sales: -24.7% MoM (month over month) and -30.6% YoY (year over year)
• Non-store retailers (i.e., e-commerce) sales: +8.4% MoM and +21.6% YoY
• Sporting goods, hobby, musical instrument & book stores sales: -38.0% MoM and -48.9% YoY
• Food & beverage stores sales: -13.1% MoM and +12.0% YoY
• General-merchandise stores sales: -20.8% MoM and -14.9% YoY
• Health & personal care stores sales: -15.2% MoM and -10.4% YoY
• Department Stores sales: -28.9% MoM and -47.0% YoY
• Furniture & home furniture stores sales: -58.7% MoM and -66.5% YoY
• Food services & drinking places sales: -29.5% MoM and -48.7% YoY
• Motor vehicle & parts dealers sales: -12.4% MoM and -32.9% YoY
• Clothing and clothing accessory stores sales: -78.8% MoM and -89.3% YoY
• Building material & garden equipment & supplies dealers sales: -3.5% MoM and +0.4% YoY
• Electronics & appliance stores sales: -60.6% MoM and -64.8% YoY
• Gas stations sales: -28.8% MoM and -42.8% YoY

All in all, as we've noted previously, beaten-down macroeconomic numbers are to be expected given the economic shutdown, shelter-in-place orders that were implemented across the country (though these are slowly being rolled back) and the significant ramp in unemployment in recent weeks. Progress on the reopening of the economy will be key going forward, as will progress on an effective treatment and vaccine to defeat the coronavirus.

Members interested in digging even deeper can view the report's official release here. As members go through the data, we encourage you to consider both the short-term (MoM) and longer-term (YoY) dynamics at play in the industries in which you are invested.