U.S. retail sales climb 1.1 percent

March gain largest in 18 months on strength of auto buys

In this March 24, 2014 photo, a pedestrian passes a J.Crew store in the Shadyside shopping district of Pittsburgh. The Commerce Department reports on retail sales for March on Monday, April 14, 2014. (AP Photo/Gene J. Puskar)
In this March 24, 2014 photo, a pedestrian passes a J.Crew store in the Shadyside shopping district of Pittsburgh. The Commerce Department reports on retail sales for March on Monday, April 14, 2014. (AP Photo/Gene J. Puskar)

WASHINGTON - U.S. retail sales in March rose by the largest amount in 18 months, led by strong gains in sales of autos, furniture and a number of other products.

The 1.1 percent jump reported by the Commerce Department on Monday was the best showing since September 2012. The government also revised February to a 0.7 percent gain, more than double its previous estimate.

Sales had fallen in January and December.

“It really is a story of pent-up demand,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “As employment levels continue to improve at a modest pace, so too should consumer spending.”

Sales of autos climbed 3.1 percent while sales at general merchandise stores, a category that covers retailers such as Wal-Mart and Target, increased 1.9 percent, the strongest one-month gain since March 2007, before the country fell into recession.

The strong March provides more evidence that the economy is emerging from a harsh winter with momentum.

Economists believe higher temperatures will encourage people to make purchases that they refrained from making during winter storms. Consumers account for 70 percent of U.S. economic activity, so spending on that front is critical in fueling a stronger recovery.

“Rising wealth, shrinking debt burdens and improving labor markets are helping American shoppers shake off the winter blahs,” said Sal Guatieri, senior economist at BMO Capital Markets.

Guatieri said overall economic growth slowed to a 1.2 percent annual rate in the January-March quarter but will rebound to growth of 3.3 percent in the second quarter. Economists at Morgan Stanley in New York also projected the economy expanded at a 1.2 percent annualized rate in the first quarter and will be followed by an acceleration to about 3.5 percent from April through June.

Many analysts believe a strong rebound in the current quarter will last through the rest of the year, with growth averaging about 3 percent in the second half of 2014.

For March, sales in a core category of products that feed into the government’s calculations of overall growth rose by 0.9 percent, almost double the 0.5 percent gain in February.

In addition to the strong showing for auto dealers and general merchandise stores, sales increased by solid amounts at furniture stores, hardware stores and clothing stores.

According to a Raymond James & Associates research note Monday, sales at “warehouse clubs and supercenters” in February - a one-month lag behind the Commerce Department’s report - rose 0.1 percent year-over-year, an improvement over last year’s comparable 0.9 percent sales drop but still below the three- and 10-year averages of 3.4 percent and 8.4 percent.

Purchases at General Motors Co., Ford Motor Co., Toyota Motor Corp., Nissan Motor Co. and Chrysler Group LLC all topped analysts’ estimates.

“It was very encouraging to see the momentum continue to build as the month progressed,”Erich Merkle, a U.S. sales analyst at Dearborn, Mich.-based Ford, said on an April 1 conference call.

Stronger growth is expected to translate into more hiring and an improving labor market.

In March, the economy reached a milestone: All the private-sector jobs lost during the recession were recovered. Private businesses shed 8.8 million jobs during the 2007-09 economic downturn. With the March gains, they now have hired 8.9 million workers. Government jobs are still below pre-recession levels.

In March, employers added 192,000 jobs, just below February’s gain of 197,000 jobs. Going forward, some economists believe the stronger economy will lift average monthly job gains to about 225,000. That will mean more income earners and consumer spending.

Information for this article was contributed by Martin Crutsinger of The Associated Press, Victoria Stilwell and Kristy Scheuble of Bloomberg News and, Cyd King of the Arkansas Democrat-Gazette.

Business, Pages 25 on 04/15/2014

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