Retail sales in the U.S. rose more than forecast in March as Americans snapped up everything from cars and furniture to clothes and electronics.
The 0.8 percent gain was almost three times as large as projected and followed a 1 percent advance in February, Commerce Department figures showed today in Washington. The median forecast of 81 economists surveyed by Bloomberg News called for an increase of 0.3 percent.
An improving job market is giving households confidence to sustain spending in the face of higher gasoline costs, boosting sales at chains such as Gap Inc. and Target Corp. Strengthening consumer demand raises the odds that the world’s largest economy will weather a recession in Europe and slower growth in China.
Households “have the income to propel their purchases now that we’re seeing job growth,” said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit and the third-best forecaster of retail sales for the 24 months ended in March, according to data compiled by Bloomberg. “They have adjusted to the higher price of fuel. The economy now needs to build on its own momentum.”
Most stocks rose after the biggest weekly drop in the Standard & Poor’s 500 Index this year. The S&P 500 fell 0.1 percent to 1,369.57 at the close in New York. The gauge was restrained by a 4.2 percent slump in shares of Apple Inc., which accounts for about 4.4 percent of the S&P 500. About six stocks climbed for every five that fell.
Optimism on the economic outlook was tempered by other data today showing that confidence among U.S. homebuilders declined and manufacturing in the New York region expanded in April at the slowest pace in five months.
Elsewhere, asking prices for homes in the U.K. rose to a record in April as a shortage of property boosted values in London, and the Bank of Korea lowered its growth forecast for this year as rising bond yields in Spain highlight the threat to Asian exports from Europe’s debt crisis.
U.S. retail sales were projected to rise 0.3 percent after a 1.1 percent gain previously reported for February, according to the Bloomberg survey. Economists’ estimates ranged from no change to a gain of 0.9 percent.
Eleven of 13 categories showed increases, including electronics, clothing and furniture stores.
Electronics may have gotten a lift from the Apple’s new iPad and some discounts on the older model, economists said. Apple said it sold more than 3 million iPads during the debut weekend for the latest model of the market-leading tablet computer. The tally is a record for opening weekend iPad sales, Cupertino, California-based Apple said in a March 19 statement.
Store chain data released earlier were in sync with today’s report. Same-store sales for the more than 20 companies tracked by Swampscott, Massachusetts-based Retail Metrics rose 3.9 percent last month, beating the average estimate for a 3.3 percent gain, as many chains offered discounts and shoppers stocked up early on spring gear.
Sales at Gap, the largest U.S. apparel chain, climbed 8 percent. Target, the second-largest U.S. discount chain, and Macy’s Inc., the owner of Bloomingdale’s and namesake stores, each posted 7.3 percent increases. All three companies beat the average analyst projection.
An improving job market is boosting incomes. Even with a less-than-predicted gain in U.S. payrolls last month -- 120,000 compared with a median forecast of 205,000 in a Bloomberg survey -- the economy has added 635,000 jobs since December as unemployment fell to 8.2 percent from 8.5 percent, Labor Department data show.
Stock-market gains are also helping sustain confidence. The S&P 500 jumped 12 percent from January through March, the best first quarter since 1998.
Sales in March may have been helped by better weather as demand at building material stores climbed 3 percent, the most this year. The average temperature was 51.1 degrees Fahrenheit (10.6 degrees Celsius) in March, the warmest on record for the month in the past 117 years, according to the National Oceanic and Atmospheric Administration.
Sales at automobile dealers defied projections of a decrease as purchases rose 0.9 percent last month, today’s report showed. The results are in contrast with industry figures.
Cars and light trucks sold at a 14.3 million annual rate in March, following a 15 million pace the prior month, according to Ward’s Automotive Group. Nonetheless, the March figures capped the strongest quarter in four years.
“The industry and consumers have been very resilient in the face of higher pump prices,” Don Johnson, vice president of U.S. sales at General Motors Co., said on a call with analysts this month. “The steadily improving economy is playing a role and so is pent-up demand and an improved credit market.”
Purchases excluding autos increased 0.8 percent, today’s report showed. They were projected to rise 0.6 percent, the survey median showed.
The retail sales data, which aren’t adjusted for prices, may have also reflected higher gasoline receipts at service stations. Filling-station sales increased 1.1 percent. Regular fuel in March averaged $3.84 a gallon, or 28 cents more than in February, according to AAA, the nation’s biggest auto group.
Excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, sales climbed 0.4 percent after a 0.5 percent increase in the previous month.
New York Manufacturing
Among other reports in the U.S. today, the Federal Reserve Bank of New York’s general economic index decreased to 6.6 this month, less than the most pessimistic forecast in a Bloomberg survey, from 20.2 in March. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut.
The National Association of Home Builders/Wells Fargo index of builder confidence decreased to 25 this month from 28 in March, the Washington-based group said today. Economists projected no change in the index, according to the median forecast in a Bloomberg survey. Readings below 50 mean more respondents said conditions were poor.