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Thursday, 11 May, 2000, 21:04 GMT 22:04 UK
US retail sales fall
Shoppers in the US
The seemingly unstoppable growth in US consumer spending showed its first signs of flattening out in April.

Retail sales fell 0.2% last month, the first decline since August 1998, according to US Commerce Department figures.

The fall was unexpected. Wall Street economists had forecast a retail sales rise of 0.4%.

Analysts say the figures reduce the need for large increases in US interest rate levels to cool off the economy.

And that sent the Dow Jones Industrial Average and the Nasdaq's benchmark index off to bright starts - up 77 and 63 points respectively in the first ten minutes of trading.

Year-on-year growth

The Dow Jones average closed up 178 points at 10,545 and the Nasdaq broke its recent losing run ind ramatic style with an 114 point gain.

The Commerce Department also revised its figures for March to 0.5%, up from the previous estimate of a 0.2% rise.

Excluding cars, retail sales were unchanged after rising 1.2% in March.

But the soaring levels of consumer spending - which has been powering the world's largest economy to its record-breaking period of growth - was reflected in the year-on-year figures.

These showed that retail sales in April were 9.7% ahead of those in the same month in 1999, compared with a 10.5% year-on-year gain recorded in March.

Soaring shares a concern

Jeffrey Applegate, chief investment strategist at Lehman Brothers, said: "I would like to think it takes the Fed out of it, but it does not.

"If you look at overall consumption, we estimate it is running around 6% this quarter, and GDP is little bit over 6%."

Gary Thayer, chief economist at Edwards and Sons, said: "The numbers do show a little bit of cooling in the economy. This is possibly an early sign that the dip in consumer confidence we saw in last three months is dampening retail sales."

The month of April was also marked by a decline in the value of many US shares, whose strong rises Federal Reserve chief Alan Greenspan has long blamed for the soaring consumer confidence and spending which have threatened to overheat the US economy.

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See also:

11 May 00 | Business
More US rate rises needed
06 Mar 00 | Business
The Greenspan effect
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