Retail sales see a 0.8% climb in March, stocks rise
American consumers, whose spending accounts for 70 percent of the economy, stepped up their shopping last month.
Retail sales in March climbed at a steady 0.8% pace, nearly three times the gain projected, reported the Census Bureau Monday. That’s a decline from the 1 percent climb in February but above January’s pace. The 81 economists surveyed by Bloomberg News predicted a 0.3 percent increase.
“Consumers shot the lights out in the first quarter,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York, in a note to clients.
Despite rising gas prices, which accounted for some of the increase, Americans spent more on building materials, cars, electronics, clothing and furniture. Joshua Shapiro, an economist at MFR Inc., said the fact that retail sales have “picked up considerably” in the first quarter is good news, especially after December’s weak gains.
A separate report from the Commerce Department revealed that U.S. companies’ restocking pace held steady in February, a sign that consumer spending will remain strong this spring. In response to the positive reports, the Dow Jones industrial average climbed more than 110 points in the first half hour of trading.
Factors responsible for the gains include a recent boost in hiring, but also unseasonably warm weather, which has bolstered clothing and home supply purchases.
Still, the improvements put retail sales at a record high of $411.1 billion. Economists predict growth at an annual rate of between 2.5 percent and 3 percent in the first quarter, about the same as the 3 percent annual pace in the October-December quarter.
Gas prices failed to rise as quickly as they did last month, as a separate report released last week reveals, lessening consumers’ fears of inflation and fueling their incentive to spend. Retail merchants reported a 4.1 percent surge in sales in March compared to last year, according to a survey of 22 stores by the International Council of Shopping Centers.