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Retail sales posted solid gains in March

Retail sales rose in March at the fastest clip in three months as warmer weather and an early Easter put consumers in a buying mood.
/ Source: The Associated Press

Retail sales rose in March at the fastest clip in three months as warmer weather and an early Easter put consumers in a buying mood.

These sales increased 0.7 percent in March, up from a 0.5 percent gain in February. It was the best showing since a 1.1 percent rise in December, the Commerce Department reported Monday.

The increase was just slightly below the 0.8 percent that had been forecast. Easter came eight days earlier than last year, and the weather in March was an improvement from February, which had been colder than usual.

In another report, the Commerce Department said that businesses boosted their inventories held on shelves and backlots by 0.3 percent in September, the biggest gain in five months.

The increase came after an extended period when businesses have tried to trim their overhang of unsold items in the face of weaker-than-expected sales.

The strength in retail sales should relieve worries that slumping home prices and rising energy costs could cause a serious cutback in consumer spending although economists cautioned that sales will be buffeted in coming months by a big jump in gasoline prices, which leaves consumers with less to spend on other items.

Consumers, who account for two-thirds of total economic activity, are currently keeping the economic expansion afloat even though activity has slowed considerably over the past year.

“This substantial advance in retail sales is welcome news for the economy,” said Peter Morici, an economist at the University of Maryland’s business school. “Cold February weather, snow and ice discouraged shoppers and consumers exhibited new vigor in March.”

The overall increase in sales last month reflected in part the higher price for gasoline. Sales at gasoline stations surged by 3.1 percent in March. Excluding gasoline sales, retail spending would have risen a more moderate 0.4 percent in March. The changes in retail sales are not adjusted for inflation.

Sales at general merchandise stores, a category which includes department stores, rose by 1.1 percent last month, rebounding from a 0.5 percent decline in February.

Sales at specialty clothing stores posted a strong 2.4 percent increase following a 1.9 percent drop in February.

Auto sales were up 0.4 percent in March, which represented a slowdown from the February sales pace, when sales had risen 0.9 percent.

Excluding autos, retail sales would have risen by 0.8 percent, double the 0.4 percent gain excluding autos in February.

In addition to gasoline stations and clothing and general merchandise stores, strength last month came in sales at furniture stores, hardware stores, restaurants and sporting goods stores.

Even with the strength last month, retailers are worried about the future, fearing that the surge in gasoline prices will hurt consumer confidence and cause a falloff in demand.

Wal-Mart Stores Inc., whose customers cut back on shopping when gas prices were high last year, said April’s selling environment would be tough while Federated Department Stores Inc. said its first-quarter sales will come in at the low end of expectations.