US retail sales for April 2025 surpassed expectations with a 0.1% increase, contrary to the anticipated stagnation at 0.0%. The previous month’s sales figures were revised upwards to 1.5%.

Sales growth, excluding autos, was 0.1%, slightly below the predicted 0.3%, following March’s 0.6% rise. Excluding autos and gas, sales rose by 0.2%, compared to a forecast of 0.9%. The control group experienced a dip of 0.2% against an expected increase of 0.3%, with a revision of the prior figure from 0.4% to 0.5%.

Retail Sales Year Over Year Growth

Year-over-year retail sales maintained a growth rate of 4.91%, showing resilience amid economic challenges. Despite the control group figures causing concern, the previous month’s performance was strong, prompting cautious evaluations from some analysts.

Food services and drinking establishments saw a 0.8% increase, reflecting robust consumer engagement. Clothing and building materials sectors each experienced a 0.9% rise. The furniture and home furnishings category saw a notable 1.4% increase. Motor vehicle sales climbed by 0.9%, while grocery stores had a modest growth of 0.1%.

The report indicates strong consumer health even amidst recent tariff challenges, although some growth might be influenced by preparing for incoming tariffs.

What we’ve seen from the latest data is a continuation of consumer activity that’s holding up more firmly than expected, even with mixed signals underneath. The headline retail sales growing by 0.1% may seem modest, but it exceeded projections that had anticipated a flat month. Perhaps more telling is the upward revision for March, moving from an already robust number to 1.5%, which, when placed alongside this April reading, underscores how momentum hasn’t faded entirely.

When stripping out vehicles—a volatile category—the 0.1% result sits a little lower than forecast, and once both fuel and autos are removed, we find a slight beat at 0.2%. It’s here where the texture of the data begins to differ. The control group, typically used for measuring inputs to GDP, slipped by 0.2%. That’s a step backward from what forecasters expected, even after an upward nudge to the prior month’s figure.

Consumer Spending Indicators

We noted that spending in food services and drink establishments, often a strong indicator of confidence in discretionary income, put in an 0.8% gain. Similarly, categories like clothing, home furnishings, and building materials posted steady growth. The breadth of that activity reveals where consumers feel unshaken. Vehicle-related sales jumped too, perhaps pushing back against weaker control group data.

While tariffs have begun to materialise, the full weight of them likely hasn’t appeared yet in the spending numbers—but there are signs that expectations for future pricing might be encouraging earlier purchases. That’s worth watching in May and June’s prints.

What traders ought to keep in view now is the divergence between the control group dip and otherwise healthy category-specific readings. We are attempting to reconcile those signals with broader inflation and wage prints, particularly as these have knock-on effects on positioning and volatility pricing. The correction in control group consumption suggests GDP tracking estimates may be trimmed for Q2, depending on how May shapes up.

Feroli’s interpretation sits at the more tempered end of analyst reactions, noting resilience but with clear deceleration. On the other hand, Zandi’s more optimistic take rests on the idea that, regardless of mixed internals, the consumer hasn’t stepped back in aggregate. Given how central consumption is to forward-looking earnings estimates and policy reaction functions, this difference in perspective opens space for renewed focus on upcoming labour market and inflation data.

The broader point here is that, while top-line demand shows a consumer that hasn’t blinked under policy tightening, the subset of goods tracked in core spending doesn’t tell the same story. We should prepare to see this tension play out in rate expectations, which may remain unsettled until clarity emerges in next week’s spending and price gauges.

From a trading strategy standpoint, the recalibration of growth expectations, even slightly, narrows the room for surprise cuts in policy assumptions, whilst also limiting any disregard for downside risk. The recent resilience in housing-linked categories is particularly interesting, given the higher-rate environment. It may offer short-term support for consumption metrics, even if broader indicators of business investment begin to stall.

If this wedge between control group spending and category-level strength persists, it could raise questions about how deep overall consumption really is once adjusted for inflation and external volatility. That leaves us watching whether May retail data show a rebound in control readings or, instead, another month of divergence.

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