Consumers feel pinch of gasoline prices in April
The economy struggled to gain momentum early in the second quarter, with retail sales posting their smallest rise in nine months in April and wholesale prices increasing more than expected.
Other data released on Thursday showed new claims for unemployment benefits fell 44,000 last week to 434,000 as one-time factors that had led to a spike in the prior week reversed. But the level of claims still suggested hiring was softening.
“There are still headwinds for the economy stemming from the high gasoline and food prices for the consumer as well as input prices for producers,” said Omair Sharif, an economist at RBS in Stamford, Connecticut. “Given the high input costs, it looks like firms are scaling back on their hiring plans.”
Retail sales increased 0.5 percent after an upwardly revised 0.9 percent gain in March as receipts at gasoline stations and grocery stores rose strongly, the Commerce Department said. Economists had expected a 0.6 percent rise.
Excluding gasoline, retail sales rose a tepid 0.2 percent.
The slim rise suggested the economy could struggle to meet economists’ expectations for growth of at least a 3 percent annual rate in the second quarter. The economy expanded at a subdued 1.8 percent pace in the January-March period, according to the government’s initial estimate last month.