Sun brings US shoppers out as retail sales rise
A HEALTHIER job market and warmer weather encouraged more Americans to shop in March.
US retail sales rose 0.8pc last month, the Commerce Department said yesterday. That's below February's 1pc increase but above January's pace.
Some of the increase went to pay higher gas prices. Still, steeper gas hasn't deterred Americans from spending more on other goods.
Consumers spent more on building materials, autos, electronics, furniture and clothing. Excluding car and gasoline sales, retail sales increased 0.7pc. And excluding autos, gas, and home supplies, so-called "core" sales rose 0.5pc in March, matching February's gain.
A separate Commerce report showed that US companies restocked at a steady pace in February. That suggests businesses expect consumers to continue this spring.
Investors initially seemed pleased by the retail sales gains. The Dow Jones index rose more than 110 points in the first half hour of trading. But it gave up half of those gains after a third report showed US builders were less hopeful about the housing market after six months of rising or steady confidence.
Joshua Shapiro, an economist at MFR, said retail sales have "picked up considerably" in the first quarter, after a weak December gain. Sales have been bolstered by greater hiring, but also unseasonably warm weather, which has added to clothing and home-supply sales.
Mr Shapiro and other economists cautioned that the warmer weather may have moved up some retail spending by consumers, which could lead to weaker retail sales in April and May.
Still, the gain pushed retail sales to a record high of $411.1bn (€312.9bn), 24pc higher than the recession low hit in March 2009.
The retail sales report is the government's first look each month at consumer spending, which represents 70pc of economic activity. The increase, along with other recent positive data on inventories and trade, suggests growth in the January-March quarter could be stronger than first thought.
Economists are estimating growth at an annual rate of between 2.5pc and 3pc in the first quarter. That's in line with the 3pc annual pace in the October-December quarter.
Americans are more confident in the economy after seeing hiring strengthen this winter. Job gains averaged 246,000 a month from December through February.
Hiring slowed to half that pace in March, although economists have suggested the lull may be temporary.
More hiring has helped lower the unemployment rate from 9.1pc in August to 8.2pc in March.
Still, the stronger hiring hasn't translated into higher salaries. Americans' pay isn't keeping pace with inflation. That, along with higher gas prices, could restrain consumer spending later this year.
Many retailers, from luxury chain Saks Inc to department store operator Macy's to discounter Target, reported sales above analysts' forecasts. (AP)