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US March retail sales hit 18-month high
US retail sales jumped by the most since September 2017 as gains in motor vehicles and gasoline stations boosted sales, signalling consumers are giving the economy greater support.
The value of overall sales in March rose 1.6 per cent after an unrevised 0.2 per cent decrease the prior month, according to Commerce Department figures released Thursday. That exceeded all forecasts in Bloomberg's survey calling for a 1 per cent gain. A separate report Thursday from the Labor Department showed filings for unemployment benefits fell last week to a fresh 49-year low.
With first-quarter gross domestic product figures due Apr 26, the surprisingly strong retail report may spur economists to further increase projections. Analysts raised economic growth forecasts for the period on Wednesday after a report showing the trade deficit unexpectedly narrowed in February.
The stronger data signals consumers may continue to drive the expansion amid solid wage gains, low unemployment and policymakers indicating interest rates will remain on hold this year. The rebound, after a December plunge, may help offset an inventory overhang that's poised to weigh on growth later this year.
Automobile dealer sales rose 3.1 per cent, 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 per cent, the most since May, while food services posted a 0.8 per cent gain, the best since July. Non-store retailers held up with a second-straight 1.2 per cent rise, as sporting goods and hobby stores saw the lone decline.
Federal Reserve officials, who have signalled they will remain patient on any policy rate changes amid low inflation and gathering 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 per cent and topped projections. The measure excludes food services, car dealers, building-materials stores and gasoline stations.
The Labor Department report showed initial jobless claims fell last week to 192,000, the lowest since September 1969. Economists had projected an increase.
Sales at filling-stations increased 3.5 per cent, in line with the prior month, the report showed, as oil prices rallied. Another Labor Department report this month showed gas prices rose 6.5 per cent in March, the most since September 2017.
Excluding automobiles and gasoline, retail sales rebounded with a 0.9 per cent rise after a drop the previous month.
Estimates in the Bloomberg survey for retail sales ranged from a 1.3 per cent gain to a 0.1 per cent rise.
January retail sales were revised up to a 0.8 per cent gain from a 0.7 per cent rise.
The retail-sales data captures just under half of all household purchases and tends to be volatile. March personal-spending figures, which detail consumer purchases, will offer a fuller picture of US consumer spending at the end of the month.
With March's rebound, retail sales have now erased December's plunge, which had put consumer spending and the overall economy on a sharply lower growth trajectory. BLOOMBERG, REUTERS