Retail sales rose 0.1% month
over month in April, well above our the consensus (-0.3%). This came despite a
decline in gasoline sales (-4.7%) but offset by an upside surprise in vehicle
sales, which were up 1.0%. Expectation of a decline for vehicle sales were
high, given the drop in unit sales during the month. Core retail sales
were up 0.5%, also well above the consensus forecast of (0.3%). This reflected
strength in clothing (1.2%), electronics (0.8%), and department store sales
(0.3%). It remains to be seen how much of the April increase will break down
into real activity as opposed to shifts in prices. It certainly suggests that,
despite some softening, households have persisted with a solid pace of
spending. Core sales growth in February and March were revised higher,
both by two-tenths, to 0.5% and 0.1% respectively. This lifted the GDP tracking
estimate to 2.9% quarter over quarter from 2.7%.