Consumers resurgent in March

0.6% retail sales increase follows three down months

Shoppers walk through a mall in Salem, N.H., earlier this month. U.S. retail sales rebounded in March after three straight monthly declines, the Commerce Department said Monday.
Shoppers walk through a mall in Salem, N.H., earlier this month. U.S. retail sales rebounded in March after three straight monthly declines, the Commerce Department said Monday.

WASHINGTON -- U.S. consumers bounced back in March and bought more cars, furniture, electronics and appliances after three months of declining retail sales.

The Commerce Department said Monday that retail sales rose 0.6 percent last month, the largest increase since November.

Sales at retailers slipped in the first two months of this year as consumers pulled back after heavy spending during the winter holidays. Last month's figures suggest Americans are returning to more free-spending ways. Easter holiday purchases also likely lifted spending. Economists predict that healthy consumer confidence, steady job gains and the impact of tax cuts will fuel solid spending growth in the months ahead.

Sales rose at grocery stores, restaurants and bars, and drug stores. Weaker sales categories included building-materials stores, which fell 0.6 percent; apparel stores, down 0.8 percent; and sporting goods, hobby, book and music stores, off 1.8 percent, the most since December, the data showed.

Online retail sales increased 0.8 percent in March and have risen nearly 10 percent compared with a year ago. That's more than double the overall retail sales gain in the past 12 months of 4.5 percent.

Retail sales are closely watched by economists because they provide an early read on consumer spending, the principal driver of the U.S. economy. Store purchases account for about one-third of U.S. consumer spending, while spending on services such as haircuts and mobile phones plans makes up the other two-thirds.

"It's nice to see the bounce-back here -- to me it's just on trend," Societe Generale senior U.S. economist Omair Sharif said. "If you look at the quarter as a whole, we're not breaking out from the kind of real spending numbers we've seen the last several years."

Eight of 13 major retail categories showed increases. Sales at health and personal-care stores rose 1.4 percent, the most in two years. Auto sales rose 2 percent, the most since September; a report last week showed purchases of cars and light trucks rose to a 17.4 million annualized rate in March, the fastest this year.

Sales rose just 0.2 percent in the first three months of the year, suggesting consumer spending overall likely increased at a sluggish pace in the January-March quarter. The slowdown comes after a 4 percent jump in consumer spending in the final three months of last year, the strongest gain in three years.

Economists forecast overall economic growth slowed to below 2 percent at an annual pace in the first quarter, after a 2.9 percent gain in the fourth quarter. But most expect it will rebound in the second quarter and top 3 percent.

There are multiple possible explanations for the consumer soft patch in the first quarter: delayed tax refunds, high utility bills sapping financial resources, a rise in interest rates, payback for over-exuberant spending in the fourth quarter in anticipation of tax cuts and similarly payback for a surge in spending in the aftermath of hurricane season. Regardless, a healthy profile for wage and salary gains signals that households have the wherewithal to provide a firmer lift to growth in the current quarter.

The relatively weak spending has kept estimates for economic growth in check, with analysts forecasting before Monday's report that gross domestic product expanded at a 2.2 percent annualized pace in the January-March period, down from 2.9 percent in the previous quarter.

"We'll see how well tax breaks work going forward -- the onus is now on the consumer," Sharif said. "People were so built up on the economy and tax cuts, but our view is that it's more steady than acceleration."

The data on Monday also showed that a decline in gasoline costs, as reported last week in the Labor Department's consumer-price index, may have weighed on filling-station receipts. Gas-station sales dropped 0.3 percent, the most since July, according to the Commerce report. Excluding automobiles and gasoline, sales advanced 0.3 percent for a second month.

Information for this article was contributed by Katia Dmitrieva, Jordan Yadoo and Sophie Caronello of Bloomberg News, and by Christopher Rugaber of The Associated Press.

Business on 04/17/2018

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