WASHINGTON – U.S. retail sales rose at a solid pace last month, as a healthier job market and warmer weather encouraged more consumers to shop.
The Commerce Department said Monday that retail sales rose 0.8 percent in March. That’s below February’s 1 percent increase but above January’s pace.
Some of the increase went to higher gas prices. Still, steeper gas prices haven’t deterred Americans from spending more on other goods.
Americans spent more on building materials, electronics, furniture and clothing.
Excluding car and gasoline sales, retail sales increased 0.7 percent. And excluding autos, gas, and home supplies, so-called “core” sales rose 0.5 percent in March, matching February’s gain.
Stock futures rose sharply after the report was released.
Joshua Shapiro, an economist at MFR Inc., said that 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.
The gain pushed retail sales to a record high of $411.1 billion, 24 percent higher than the recession low hit in March 2009.
The government’s retail sales report is its first look each month at consumer spending, which represents 70 percent 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 2.5 percent and 3 percent in the first quarter. That’s in line with the 3 percent 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 per 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 9.1 percent in August to 8.2 percent 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.
Gas prices rose more slowly last month, according to a separate report released last week. And in the last two weeks, they are showing signs of leveling off. That may also be giving consumers more incentive to spend.
Americans stepped up shopping last month. Retail merchants reported a 4.1 percent increase in sales in March compared to a year ago, according to a tally of 22 retailers by the International Council of Shopping Centers.
Many retailers, from luxury chain Saks Inc. to department store operator Macy’s to discounter Target reported sales above analysts’ forecasts.