Americans bought more electronics, started home improvement projects and updated their wardrobes last month, inspired by warmer weather and a healthier job market.
US retail sales rose 0.8 percent last month, the US Department of Commerce said on Monday.
The increase capped a strong quarter of gains and contributed to a brighter outlook among economists for growth in the January-March quarter. Businesses are responding by restocking their shelves at a steady pace, a sign that they expect the trend to carry over into the spring.
More retail spending also helped offset a decline in confidence among homebuilders. And it could ease concerns about hiring last month, which slowed to half the pace of the previous three months.
“Retail sales soared in March with stores in just about every category recording sharp increases over February levels,” said Joel Naroff, chief economist at Naroff Economic Advisors. “And let’s not forget, the February spending was strong.”
The more robust retail sales last month contributed to a mixed day of trading on Wall Street. The Dow Jones Industrial Average closed up roughly 72 points to end the day at 12,921. However, the S&P 500 index ended the day essentially flat, while the NASDAQ Composite fell 23 points.
The retail sales report is the government’s first look each month at consumer spending, which represents 70 percent of economic activity.
Consumers are spending more despite paying higher gas prices and seeing little growth in their wages.
Shoppers bought more furniture, groceries, clothes and sporting goods last month. They also paid more for gas.
Still, excluding cars, gas and food, sales rose 8.2 percent in the first quarter, the most in two years.
The gain pushed total retail sales to a record high of US$411.1 billion, 24 percent higher than the recession low hit in March 2009.
“This is a good report,” said Chris Christopher, an economist at IHS Global Insight. “Consumers are spending despite feeling the pump price pinch.”
Other recent data suggest stronger growth in the January-March quarter.
Business stockpiles rose a seasonally adjusted 0.6 percent in February, the Commerce Department said.
Larger stockpiles require businesses to order more goods. That leads to more factory production, which boosts growth.
Overall sales — which includes wholesalers and manufacturers as well as retailers — grew 0.7 percent, more than inventories.
James Marple, an economist at TD Bank, forecasts the economy expanded by about 2.7 percent at an annual pace in the January-March quarter. That’s a full point higher than his estimate a month ago.
Still, the housing market has struggled to gain momentum.
The US National Association of Home Builders/Wells Fargo said on Monday that its builder sentiment index fell for the first time in seven months.
Builders also expressed weaker confidence in sales over the next six months.
“What we’re seeing is essentially a pause in what had been a fairly rapid buildup in builder confidence that started last September,” said David Crowe, chief economist with the homebuilders’ group. “This is partly because interest expressed by buyers in the past few months has yet to translate into expected sales activity.”