US retail sales accelerated in March by the most in 10 months as business reopenings, increased hiring and a fresh round of stimulus checks emboldened shoppers.
The value of overall sales increased 9.8 per cent last month in a broad advance after an upwardly revised 2.7 per cent decline in February, Commerce Department figures showed on Thursday. The median forecast in a Bloomberg survey of economists called for a 5.8 per cent gain in March receipts.
The distribution of US$1,400 stimulus cheques to individuals and robust job growth last month help explain the rebound in sales, closing out a quarter of sturdy consumer demand.
A quicker pace of Covid-19 vaccinations and the easing of pandemic-related restrictions on activity will probably underpin sales, especially in retail categories that have been hardest hit by social distancing.
A separate report on Thursday showed a plunge in initial state jobless claims. Applications dropped to a fresh pandemic low, signalling a further strengthening of the job market and economy. The outsize gain during the month also reflected a rebound from February, when economic activity was limited by sub-freezing temperatures and winter storms that overwhelmed power grids in Texas and the Great Plains.
The government's report showed all 13 retail categories posted sales gains in March. Receipts at restaurants rose 13.4 per cent in March, while sales at apparel retailers jumped 18.3 per cent - both the strongest advances since June of last year. Businesses that have been strong throughout the pandemic, including furniture outlets and building material merchants, also experienced solid March sales. E-commerce sales also rebounded.
Ray Blanchette, chief executive officer of restaurant chain TGI Friday's, said comparable sales, a key indicator in the restaurant industry, turned positive in March and April over 2019 figures. "Stimulus checks helped," he added. "There's a lot of pent-up demand. And when folks get out they want to enjoy themselves. In many cases, it's the first time they've done it in some time."
While federal stimulus payments provided a temporary spending boost in the month, their impact in the longer term remains to be seen. Reports in the coming months will show whether job growth and overall consumer confidence will be enough to allow for such huge monthly sales gains. Further, as the economy continues to reopen, consumers may steer their spending away from merchandise and more toward travel and other services, which could lead to more moderate retail sales.
Gas station receipts rose 10.9 per cent, at least in part reflecting higher fuel prices, which averaged US$2.88 per gallon at the end of March, compared with US$2.72 at the end of February. The retail figures aren't adjusted for price changes.
Sales at car and motor vehicle parts dealers advanced 15.1 per cent in March, even as automakers faced production constraints due to the global semiconductor shortage. BLOOMBERG