Automobiles drive US retail sales higher in March

WASHINGTON: US retail sales rebounded in March after three straight monthly declines as households boosted purchases of motor vehicles and other big-ticket items, suggesting consumer spending was heading into the second quarter with momentum.

The Commerce Department said yesterday retail sales increased 0.6 percent last month after an unrevised 0.1 percent dip in February. January data was revised to show sales falling 0.2 percent instead of the previously reported 0.1 percent drop. Economists polled by Reuters had forecast retail sales rising 0.4 percent in March. Retail sales in March increased 4.5 percent from a year ago.

Excluding automobiles, gasoline, building materials and food services, retail sales rose 0.4 percent last month after being unchanged in February. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have risen 0.1 percent in February. Last month’s pick-up in core retail sales will do little to change expectations of a sharp slowdown in consumer spending in the first quarter.

The dollar was trading weaker against a basket of currencies. Prices for US Treasuries were marginally lower while US stock index futures rose slightly. Economists largely blame the weakness in retail sales at the start of the year on delays in processing tax refunds. Some also argue that income tax cuts which came into effect in January, only reflected on most workers’ paychecks in late February.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a robust 4.0 percent annualized rate in the fourth quarter. It is expected to have slowed to below a 1.5 percent rate of increase in the first quarter. Growth estimates for the JanuaryMarch quarter are running below a 2 percent rate. The economy expanded at a 2.9 percent pace in the OctoberDecember quarter. The government will publish its advance estimate for first-quarter GDP growth later this month. In March, auto sales jumped 2.0 percent, the largest increase since last September, after declining 1.3 percent in February. Receipts at service stations fell 0.3 percent, reflecting cheaper gasoline.

Sales at furniture stores climbed 0.7 percent while those at electronics and appliance stores increased 0.5 percent. But sales at building material stores fell 0.6 percent last month. Receipts at clothing stores dropped 0.8 percent while sales at online retailers increased 0.8 percent. Sales at restaurants and bars gained 0.4 percent. Receipts at sporting goods and hobby stores dropped 1.8 percent. —Reuters