U.S. retail sales in March up 1.6%; joblessness dips
sales in the U.S. jumped by the most since September 2017 and firsttime filings for unemployment benefits dropped to a fresh 49-year low, as a strong labor market gives American consumers the wherewithal to keep the economy chugging along.
The value of overall sales in March rose 1.6 percent, boosted by gains for automobile dealers and gasoline stations, after an unrevised 0.2 percent decrease the previous month, according to Commerce Department figures released Thursday. That exceeded all forecasts in Bloomberg’s survey calling for a 1 percent gain.
A Labor Department report released at the same
time showed initial jobless claims fell last week to 192,000, the lowest since September 1969. Economists had projected an increase.
“For the first time in months, markets were finally presented with an upbeat report on U.S. retail sales,” said Jennifer Lee, a senior economist with BMO Capital Markets. “Americans hit the malls with a vengeance.”
“The labor market is alive and well,” said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC. Income gains support consumer spending and “as long as the labor market is doing well there is good reason to expect consumer spending should do fine.”
Sales at gas stations climbed 3.5 percent in March, while spending at auto dealers jumped 3.1 percent. Clothiers reported a 2 percent gain and furniture stores enjoyed a 1.7 percent bump.
With first-quarter gross domestic product figures due April 26, the surprisingly strong retail report spurred economists to further increase projections. Analysts raised economic growth forecasts for the period Wednesday after a report showing the trade deficit unexpectedly narrowed in February. The economy had showed signs of slowing heading into 2019, before the U.S. central bank put interest rate increases on indefinite hold and a government shutdown clouded the outlook.
A Federal Reserve Bank of Atlanta estimate of first-quarter gross domestic product was revised up Thursday to 2.8 percent from 2.4 percent Wednesday.
Goldman Sachs Group Inc. economists said any slowdown may be confined to the first three months of the year. “A dovish Fed pivot, the reopening of the government, and a tentative rebound in global growth have bolstered the case for reacceleration,” according to a note co-written by Goldman Sachs economist Spencer Hill.
The stronger data signal consumers may continue to drive the expansion amid solid wage gains, low unemployment, and policy makers indicating interest rates will remain on hold this year. The rebound, after a December plunge, may counter an inventory overhang that’s poised to weigh on growth later this year.
“Retail sales ended 2018 abysmally and began 2019 extraordinarily,” Jefferies LLC economists Ward McCarthy and Thomas Simons wrote in a note. “With a boost from January and March, the consumer sector will be a source of growth again in the first quarter.”
Automobile dealer sales rose 3.1 percent, the most in 18 months, after a drop the prior month. Industry data from Ward’s Automotive Group previously showed unit sales rebounded in March.
Twelve of 13 major retail categories increased. Sales at clothing stores increased 2 percent, the most since last May, while food services posted a 0.8 percent gain, the best since July. Non-store retailers held up with a second-straight 1.2 percent rise, as sporting goods and hobby stores saw the lone decline.
Fed officials, who have signaled they will remain patient on any policy rate changes amid low inflation and trade uncertainty, will be watching for indications whether consumer spending gains are likely to be sustained over time.
Sales in the “control group” subset, which some analysts view as a cleaner gauge of underlying consumer demand, climbed 1 percent and topped projections. The measure excludes food services, car dealers, building-materials stores and gasoline stations.
Information for this article was contributed by Reade Pickert, Jordan Yadoo and Sophie Caronello of Bloomberg News and by Josh Boak of The Associated Press.