US retail sales plunge amid pandemic lockdowns

US retail sales plunged 16.4 percent in April as consumers cut spending amid the nationwide coronavirus lockdown, the Commerce Department reported Friday.

Analysts expected sales to drop 12.3 percent. Consumer spending represents about two-thirds of the US economy.

The US Federal Reserve is expected to announce Friday that industrial production declined a seasonally adjusted 11.1 percent in April, the sharpest monthly decline in more than 100 years.

Government-mandated travel restrictions, business closures and social distancing pummeled retail sales. Many enterprises remain closed or are slowly reopening as some states begin to restart the economy.

"April is the ugliest month of data that we're going to get," Joel Naroff of Naroff Economic Advisors, told The Wall Street Journal. "This is giving us an indication of how much we have to do just to get back to where we were."

Retail sales plunged across the board. Clothing and accessory sales were down 89.3 percent and were followed by furniture (-66.5 percent), electronics and appliance (-64.8 percent) and sporting equipment (-48.9 percent).

But the stay-at-home orders meant more people ate at home rather than going to restaurants, boosting food and beverage sales 12 percent. However, sales at restaurants and bars fell 48.7 percent, the Commerce Department said.

Brick-and-mortar retailers have been hit hard in the downturn. Many buyers consider online shopping to be safer and for some it's the only choice as many shopping malls remain closed.

Upscale retailer Neiman Marcus has filed for bankruptcy protection. J. Crew, catering to younger buyers, has done the same. J.C. Penney may follow suit.

Stage Stores, which operates 738 stores in 42 states branded as Palais Royal, Gormans and others, plans to liquate some locations and seek a buyer.

The downbeat retail sales report followed news from the US Labor Department Thursday that another 2.981 million workers filed for unemployment claims last week, boosting the total during the coronavirus pandemic to nearly 36.5 million – the largest number of job losses in US history.

The unemployment rate is now 14.7 percent and many people therefore cut back on spending.

The economy was strong and the job market robust through February. Then the coronavirus, also called COVID-19, hit and state officials ordered businesses closed to curb spread of the virus.

However, the number of initial claims has declined for six consecutive weeks since peaking in the last week of March. This may suggest that the worst of the job cuts are over.

In early trading Friday, the Dow Jones Industrial Average fell 126.56 points, of 0.54 percent, to 23,498.78. The S&P 500 lost 0.68 percent. The Nasdaq composite dipped 0/96 percent.

On Thursday, the Dow opened down, but rallied and closed up 377.37 points or 1.62 percent, at 23,625.34. The S&P 500 gained 1.15 percent for the day. The Nasdaq Composite added 0.96 percent.

On Friday, the price of West Texas Intermediate crude, the gauge for US oil prices, rose 3.66 percent to $28.57 a barrel. Brent crude, the worldwide benchmark, gained 2.25 percent to $31.84 a barrel. The price of oil is a proxy for future economic activity. The

In a related matter, Hon Hai Precision Industry, better known as

Foxconn, said its first-quarter profit fell nearly 90 percent as the coronavirus pandemic cut demand for products marketed by Apple and other major clients.

Despite current disruptions in production, Foxconn, the world's largest contract electronics manufacturer, earned $T2.1 billion (US$70.25 million), but fell far short of Wall Street's earnings estimates. The company expects earnings to rebound as production in China returns to normal.

Foxconn also manufactures LCD panels in Mount Pleasant, Wisconsin.

Foxconn's stock is traded in Taiwan and Shanghai.

Taiwan Semiconductor Manufacturing said Friday it plans to build a $12 billion fabrication plan in Arizona.

Construction is scheduled to start in 2021. The company said the project will create 1,600 jobs. Financial incentives, if any, weren't disclosed.

Taiwan Semiconductor has plants in China and major Chinese customers, including Huawei.

The plant in Arizona would manufacture 5-nanometer chips, the smallest, fastest and most powerful now available.