A closed store on Sunday in the Queens borough of New York, which has been hit hard by the coronavirus pandemic.
Photo: shannon stapleton/ReutersConsumers pulled back on spending and factories cut output at the fastest pace in decades as lockdowns to contain the coronavirus pandemic hit the U.S. economy.
Retail sales, a measure of purchases at stores, at restaurants and online, fell in April by a seasonally adjusted 16.4% from a month earlier, the biggest drop since record-keeping began in the early 1990s, the Commerce Department said Friday.
The Federal Reserve separately said manufacturing output fell by 13.7% in April, its largest monthly decline in records dating to 1919. A broader reading for overall industrial production, which includes mining and utility output, posted its steepest drop in records dating back more than a century.
The record declines in spending and output could represent the worst of economic damage from coronavirus-related shutdowns, economists said, although most expect the recovery will be slow.
“April was the cruelest month,” said Craig Johnson, president of Customer Growth Partners, a consulting firm. Retail spending likely bottomed out in the first week of May, he said, with spending picking up due to Mother’s Day and gradual state reopenings.
“It’s going to be less worse with each month,” said Mr. Johnson, “as people slowly come out of the foxhole and enter the mainstream of American consumerism.”
Social distancing, business closures, travel restrictions and other disruptions that started in mid-March have taken a particularly heavy toll on retail stores and restaurants, many of which remain closed or are opening gradually as states begin to reopen their economies.
Consumers spent less on vehicle purchases, gas and on food and drinks at bars and restaurants—categories that drove last month’s decline in retail sales. But nearly every other category suffered too as people lost their jobs, commuters worked from home and malls remained shut.
Year-over-year data showed the magnitude of the coronavirus-related hit to the retail industry. Overall retail spending in April was down more than 20% from the same month last year. Clothing-store sales in April were down nearly 90%, and sales at department stores, bars and restaurants, and sporting goods stores were all down nearly half. Consumers increased online purchases this month from the same period last year, boosting online retailers by more than 20%. Sales at food and beverage stores also were up by 12% from the same month a year ago.
The exception was sales at nonstore retailers—a category that includes internet merchants such as Amazon.com Inc.—which grew 8.4% month-over-month.
Grocery stores saw a 13.2% decline in sales, while receipts at bars and restaurants were down 29.5% from the prior month as establishments kept their doors shut or switched to delivery only.
Sales were weak across a range of categories, but nonessential businesses were particularly hard hit. Sales at furniture stores dropped 58.7% and electronics fell 60.6%. Clothing sales plummeted 78.8% from March.
Year-over-year data showed the magnitude of the coronavirus-related hit to the retail industry. Overall retail spending in April was down more than 20% from the same month last year. Clothing-store sales in April were down nearly 90%, and sales at department stores, bars and restaurants, and sporting goods stores were all down nearly half. Consumers increased online purchases this month from the same period last year, boosting online retailers by more than 20%. Sales at food and beverage stores also were up by 12% from the same month a year ago.
Consumer spending is the main driver of the U.S. economy, accounting for more than two-thirds of economic output, and retail sales account for about a quarter of all consumer spending.
Friday’s report, which isn’t adjusted for inflation, didn’t track spending on most services, such as health care.
Fern Cole, a Denver bus driver, is spending less than usual and cooking at home “just because I don’t know if my paycheck’s going to be there next week.”
Ms. Cole, who lives in Westminster, Colo., said she has been limiting her outlays to roughly one visit to the grocery store a month and some online purchases of craft items and fish food.
Denver bus driver Fern Cole has been spending less than usual during the pandemic.
Photo: Fern Cole“Every day I’m putting my life at risk, my job is to get people to and from work,” the 61-year-old said. “Now it’s really scary, you just don’t know who has [coronavirus].”
How quickly the threat from the virus diminishes and consumers regain confidence are factors in the economy turning around. A measure of consumer confidence rose in May as government stimulus checks improved consumers’ finances. The University of Michigan’s preliminary index of consumer sentiment rose to 73.7 from 71.8 in April.
The pullback in spending is hurting retailers. J.C. Penney Co. on Friday filed for chapter 11 bankruptcy protection, becoming the latest in a parade of retailers to seek a court restructuring during the coronavirus pandemic. Neiman Marcus Group Inc., J.Crew Group Inc. and Stage Stores Inc. have all recently filed for bankruptcy. And restaurant chains Denny’s Corp. and Jack in the Box Inc. reported lower earnings and sales in their most recent quarters.
“2020 is going to be a year of rebalancing,” said Under Armour Chief Executive Patrik Frisk during an earnings call Monday. The athletic-apparel retailer reported that about 80% of global business has been at a standstill since mid-March, and revenue may drop as much as 60% in the second quarter.
Retailers on both sides of the Atlantic are “trying to figure out how fast they can open and how fast the consumer is going to come back,” Mr. Frisk said.
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Josh Wolfgang, owner of outdoor sports retailer SkiEssentials in Stowe, Vt., has been operating online only for about the past month, and said “people are looking for deals.” Bikes and Rollerblades are doing well, since “people are at home, they have their kids at home, they get a bike and go outside.”
That trend is also helping the boating industry, according to recreational boat retailer OneWater Marine Inc.’s CEO Austin Singleton. Sales “really came to a screeching halt” in mid-March, but have picked up in April and May, since boating is a leisure activity that allows people to control their social distancing and get outside.
Competition from European vacations, summer camps and festivals has been largely eliminated for this summer because of coronavirus shutdowns, and “that has driven a lot of business in our direction,” Mr. Singleton said.
Write to Harriet Torry at harriet.torry@wsj.com
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