Weekly Economic Digest - May 20, 2010

Retail Sales Continue To Improve

The U.S. Census Bureau announced that its advance estimates of retail and food services sales in April—equaling $366.4 billion after various adjustments—were up 0.4 percent from the revised March figures and 8.8 percent above retail sales in April 2009.  The sales figures come on the heels of the unusually strong growth in retail sales in February and March.  Although the increase in retail sales in March was driven largely by the rise in sales of motor vehicles and parts, that was not the case in April, where increases were more broadly based across sale categories; excluding the sales of motor vehicles and parts, sales were still up 0.4 percent from March and 7.6 percent from April 2009 (see chart).  Retail sales have now increased for seven straight months, and online-retail and catalog sales were up for the twelfth straight month, a continuing sign that shoppers are shifting their purchases online.  Consistent with the shift from traditional to non-traditional store purchases, non-store retailers have increased the number of positions during the last three months while electronic and appliances stores, and general merchandise stores, have decreased the number of jobs during the last two months.

Positive Signs for Industrial Production and Capacity Utilization

The Federal Reserve released preliminary estimates showing that industrial production rose 0.8 percent in April after rising 0.2 percent in March.  Mining production rose by 1.4 percent—the fourth straight month of growth—and manufacturing production rose by 1 percent; since April 2009, manufacturing output has grown by 6 percent.  Preliminary estimates of capacity utilization also showed gains in April.  Within market groups, there was a rise in all production categories: consumer products, business equipment, construction supplies, and materials.  Production of construction supplies led the way with a 2.8 percent increase.  Overall capacity utilization rose 0.6 percent points in April.  In particular, capacity utilization in manufacturing rose 0.8 percentage points and is up 5.7 percentage points from its June 2009 trough.  For the heavily-hit manufacturing industry, the growth in output and capacity utilization are positive signs of continuing recovery.

Small Businesses Still Facing Difficulty in Access to Credit

The National Federation of Independent Business (NFIB) reported that its Index of Small Business Optimism rose to 90.6 in April, a 3.8 point gain that ended seven consecutive months of readings below 90.  Although overall optimism has improved, the news from the survey was mixed.  A larger number of firms, at the time they were surveyed, expected real sales to be higher the next three months.  However, there were more firms that had a harder time getting credit and fewer firms that created jobs in the past three months.  The NFIB survey echoed the findings of a recent Joint Economic Committee report on small businesses, which showed that despite signs of economic recovery, small businesses continue to face tight credit conditions and remain reluctant to hire new workers.