All eyes will focus tomorrow on the April jobs report, but two more economic indicators hit today that underscores the weakening of the American economy in the spring. Retail sales slowed down, perhaps thanks to a warm winter that shifted demand:
With the early start of spring and Easter behind us, retail sales slowed in April, with many large U.S. retailers falling short of analysts’ estimates.
The Thomson Reuters same-store sales index showed a rise of 0.8 percent for April sales at stores open at least a year, short of analysts’ estimates for an increase of 1.5 percent. Sales in March had risen 4.3 percent.
Retailers were up against tough comparisons last year, when retail sales jumped 9.0 percent, according to Thomson Reuters. Last year, April benefited from Easter, which fell in late April.
Easter didn’t fall all that early in April, though. The holiday hit on the 8th, about midrange for the holiday, and certainly late enough to have pulled most Easter shopping into the same month. Reuters suggests that a better analysis of April would be to include March in the calculations, and that may be true with individual retailers, but less so in the meta-economic sense. March did better than expected at a 4.3% rate of increase, but considering the two together would show a much more tepid rate of increase in the economy — and would tend to obscure the fact that demand has fallen off.
The slowdown extended to the service sector, according to the Institute for Supply Management:
U.S. service companies, which employ roughly 90 percent of the work force, expanded more slowly in April. Companies saw less growth in new orders and hired at a weaker pace.
The Institute for Supply Management said Thursday that its index of non-manufacturing activity dropped to 53.5 last month from 56 in March. Any reading above 50 indicates expansion.
The report contributed to a raft of mixed data that suggests the economy is growing only modestly. …
The latest reading was slightly below the long-run average for the index of 53.9. Still, economists pointed out that the reading showed service companies expanded for the 28th straight month. And the ISM’s manufacturing index, released Tuesday, showed that U.S factory activity grew in April at the fastest pace in 10 months.
The ISM index on manufacturing doesn’t match up to the data in yesterday’s ADP private-sector jobs report. Manufacturing employment dropped by 5,000 jobs, the first time in seven months that happened. We won’t get the April manufacturing reports until later this month, but the March reports on both durable-goods and overall factory orders were abysmal — the worst in three years.
As for 28 straight months of service-sector expansion, that’s better news than the alternative, of course. However, we aren’t seeing the kind of expansion that creates jobs in significant numbers, as I noted earlier in the post on weekly jobless claims and in my column at The Fiscal Times. This is the weak kind of stagnation that has characterized the Obama recovery, and it’s not likely to change while Obama’s policies remain in place.