By Victoria Stilwell
Retail sales increased in March by the most since September 2012 as Americans bought more cars, clothing and garden supplies, helping the economy recover from a weather-depressed start to the year.
The 1.1 percent advance exceeded the median projection in a Bloomberg survey and followed a 0.7 percent gain in February that was bigger than previously reported, Commerce Department figures showed today in Washington. The median forecast of 78 economists called for a 0.9 percent increase. Sales excluding receipts at gas stations were the strongest in four years.
The gains were broad-based among retailers, highlighting pent-up demand after falling temperatures and snow storms kept some Americans from heading to shopping malls early in the first quarter. Further job growth that spurs wage gains and confidence will help provide an added push for consumer spending, which accounts for almost 70 percent of the economy.
“It really is a story of pent-up demand,” said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. Price is the best forecaster of sales in the last two years, according to data compiled by Bloomberg. “As employment levels continue to improve at a modest pace, so too should consumer spending.”
Estimates in the Bloomberg survey ranged from a 0.1 percent drop to a 1.5 percent gain after a previously reported 0.3 percent increase in February.
Stock-index futures extended gains after the report, with the contract on the Standard & Poor’s 500 Index expiring in June rising 0.6 percent to 1,821.6 at 8:55 a.m. in New York.
Ten of 13 major categories showed sales increases last month, led by the biggest gain in motor vehicle purchases since September 2012. Sales at department and general merchandise stores jumped the most since March 2007.
Excluding a decline at gasoline stations, retail sales jumped 1.4 percent last month, the most since March 2010.
Sales at automobile dealers climbed 3.1 percent after rising 2.5 percent in February, today’s figures show.
As the weather warmed in March, auto dealerships became busier as consumers also took advantage of generous incentives. Cars and light trucks sold in March at a 16.3 million annualized rate, the fastest since May 2007, following a 15.3 million pace the prior month, according to figures from Ward’s Automotive Group.
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, Michigan based Ford, said on an April 1 conference call. “Is there more out there? I guess we’ll see when the market comes to us in April.”
A 0.7 percent gain in retail sales excluding autos was the biggest in more than a year after a 0.3 percent increase in February, today’s data showed. The figures used to calculate gross domestic product, which exclude categories such as food services, auto dealers, home-improvement stores and service stations rose 0.8 percent in March after rising 0.4 percent the prior month.
In addition to gains at department stores and car dealers, consumers spent more at furniture, building-supply and sporting- goods outlets. Internet sales also picked up and Americans dined out more, today’s figures showed.
An improving labor market will help make it easier for consumers to boost their spending. Payrolls grew by 192,000 in March after a gain of 197,000 in the previous month that was bigger than initially reported, Labor Department figures showed earlier this month.
The gains followed two months of weather-depressed jobs and spending data that clouded the outlook for the economy.
After winter weather slowed sales at Wal-Mart Stores Inc. in the first two weeks of its fiscal first quarter, things are starting to look up, said Charles Holley, chief financial officer for the world’s largest retailer, at a March 11 industry conference. “Since that time, we’ve experienced very good sales,” Holley said. “It’s amazing what a little sunshine can do.”