Sales jumped a greater-than-forecast 1.1 percent, the biggest gain since September 2012, following a 0.7 percent advance in February that was more than twice as large as previously reported, Commerce Department figures showed Monday in Washington. Ten of 13 categories, from auto dealers to furniture and clothing stores, showed a pickup.
More seasonable temperatures brought out shoppers who had holed up at the start of the year, unleashing demand delayed by the snow storms that blanketed much of the country. While the surge in sales came too late to boost economic growth in the first quarter, it will probably propel a marked rebound from April through June.
“It really is a story of pent-up demand,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit and the best sales forecaster in the past two years, according to data compiled by Bloomberg. “As employment levels continue to improve at a modest pace, so too should consumer spending.”
The median forecast of 78 economists surveyed by Bloomberg called for a 0.9 percent increase in total sales. Estimates ranged from a 0.1 percent drop to a 1.5 percent gain after a previously reported 0.3 percent increase in February.
The sales figures used to calculate gross domestic product, which exclude categories such as auto dealers and gasoline stations among others, showed a 0.8 percent increase, the biggest since January 2013, after a 0.4 percent advance in February. While the gain is probably not enough to lift first- quarter growth, it provides a good starting point for this quarter.
After Monday’s report, economists at Morgan Stanley in New York projected the economy expanded at a 1.2 percent annualized rate in the first quarter, followed by an acceleration to around 3.5 percent from April through June.
Excluding declining receipts at gasoline stations, retail sales jumped 1.4 percent last month, the most since March 2010.
The increase last month was led by the biggest gain in motor vehicle purchases since September 2012. Sales at department and general merchandise stores, which include merchants such as Wal-Mart Stores jumped 1.9 percent, the most since March 2007.
After winter weather slowed sales at Wal-Mart in the first two weeks of the fiscal first quarter that began in February, things are starting to look up, Charles Holley, chief financial officer for the world’s largest retailer, said 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.”
Sales at automobile dealers climbed 3.1 percent after rising 2.5 percent in February, Monday’s figures show.
As the weather warmed in March, auto dealerships became busier as Americans 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 data from Ward’s Automotive Group.
Purchases at General Motors, Ford, Toyota, Nissan and Chrysler 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, Monday’s data showed.
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, Monday’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.