April retail sales sink to new lows, reports Commerce and NRF

April retail sales data, which was issued today by the United States Department of Commerce set records, but not in a good way, as they continued to feel the economic pain of the coronavirus, or COVID-19, pandemic.

Commerce reported that total April retail sales—at $403.9 billion—fell 16.4% sequentially, and 21.6% annually, following March’s $483.5 billion tally, which marked an 8.3% annual decline. This two-month stretch marks the largest decline for two consecutive months on record, with each month setting new records for lowest monthly sales. What’s more, it outdid the 18.5% decline recorded in May 1938 and the 15.1% annual decline in February 1981.

Total U.S. retail sales from February through April were off 7.7% annually.

Commerce reported significant declines in several key retail sectors, including: retail trade stores down 15.1%; clothing and clothing accessories down 89.3%; and food and beverage down 13.1%. Non-store retail sales, which includes e-commerce, were up 21.6% annually.

Like last month, Commerce officials noted in this month’s release that “[d]ue to recent events surrounding COVID-19, many businesses are operating on a limited capacity or have ceased operations completely.” And they added that the U.S. Census Bureau has monitored response and data quality and determined estimates in this release meet publication standards. Commerce also noted that more information regarding how this specific report was compiled is available through this link.

National Retail Federation President and CEO Matthew Shay noted in a statement that these retail sales numbers are not a surprise, given the current state of affairs.

“The vast majority of retail stores have been closed, we are in the midst of historic unemployment and when it comes to personal finances, discretionary spending takes a back seat to essentials,” he said. “Prior to this pandemic, retail was setting records in year-over-year growth, employment and investment. It is a resilient industry serving a smart consumer, and despite today’s report, we know it will be leading our nation’s economic recovery as this crisis recedes.”

The NRF reported that based on its calculation of retail sales, which excludes automobile dealers, gasoline stations, and restaurants, indicated that April was down 14.1% compared to March, on a seasonally-adjusted basis, and were off 8.7% annually on an unadjusted basis. NRF officials explained that these numbers show less of a decline that Commerce’s numbers, as the excluded categories were among those most affected, with fewer people driving and the majority of restaurants limite to take out or closed down.

NRF highlighted retail April retail numbers for various sectors, including:

-Online and other non-store sales were up 21.2% unadjusted year-over-year and up 8.4% month-over-month seasonally adjusted;
-Grocery and beverage stores were up 13.3% unadjusted year-over-year but down 13.1% month-over-month seasonally adjusted;
-Building materials and garden supply stores were up 1.2% unadjusted year-over-year but down 3.5% month-over-month seasonally adjusted;
-Health and personal care stores were down 10.8% unadjusted year-over-year and down 15.2% month-over-month seasonally adjusted;
-General merchandise stores were down 13.8% unadjusted year-over-year and down 20.8% month-over-month seasonally adjusted;
-Sporting goods stores were down 48.7% unadjusted year-over-year and down 38% month-over-month seasonally adjusted;
-Electronics and appliance stores were down 64.8% unadjusted year-over-year and down 60.6% month-over-month seasonally adjusted;
-Furniture and home furnishings stores were down 66.3% unadjusted year-over-year and down 58.7% month-over-month seasonally adjusted; and
-Clothing and clothing accessory stores were down 89.3% unadjusted year-over-year and down 78.8% month-over-month seasonally adjusted

NRF Chief Economist Jack Kleinhenz observed that as predicted, retail sales were bad in April and lower than in March.

“This should come as no surprise since April was the first full month when most businesses not considered essential were closed, both in retail and across the economy,” he said. “But month-to-month comparisons provide little insight other than indicating that most of the economy was on lockdown. Now that we’re in mid-May, many businesses are already starting to reopen. Relief payments and pent-up demand should provide some degree of post-shutdown rebound, but spending will be far from normal and may be choppy going forward. I’m still of the opinion that we went into this with the economy on a sound footing and that we will hopefully come out of it the same,” Kleinhenz said. “But we’re going to need more data to tell us whether the underpinnings of the economy have been damaged and how badly. We need to carefully watch the data and learn to understand what it is telling us.”

What’s more, he noted that the reliability of April’s numbers could be questionable because many retailers whose businesses were closed were not in their offices to respond to the Census Bureau’s monthly survey of sales data. And he added that the unprecedented economic situation makes it difficult to seasonally adjust the data for the fluctuations in sales that normally come in predictable cycles throughout the year.

In a research note, Neil Saunders, Managing Director of GlobalData Retail, observed that April was the month when large parts of the retail economy simply ground to a halt.

“Overall this is a dire set of numbers,” wrote Saunders. “However, the good news is that April is likely the trough – the lowest point of decline. May is the month when retail has started to reopen, and consumers have come back out to shop. However, the pace of opening is slow, and many shoppers remain in financial distress. As such, May will not be a month of celebration. Nor will June. Nor July. Nor probably the rest of this year. Retail’s recovery will be slow and, in our view, it won’t be until 2021 before trade starts to return to more normal patterns.”