After several so-so months, retail sales in March posted an outsized 1.1 percent monthly gain, helping to ease fears that the economy might be sliding back into lower gear.
Not only were the retail sales broad-based in March, but February sales numbers, first thought to have posted a sluggish 0.3 percent gain, were also revised upwards to a 0.7 percent gain. It suggests things weren’t ever as bad for the sector as first thought.
“The weak showing on the retail front for December and January was due to unseasonably colder winter weather. However, consumers came back with a vengeance in March,” said Chris Christopher, director of consumer economics for forecaster IHS Global Insight. “There were significant gains posted by autos, furniture, building material, clothing, general merchandise, restaurants and non-store retailers.”
In fact, only electronics retailers and gas stations saw sales drop in March, according to the Commerce Department. Excluding gasoline, retail sales actually surged forward by 1.4 percent last month. That was almost twice the consensus view of mainstream economic forecasters.
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“While consumer spending started the first quarter on a down note, February improved and March capped off last quarter on a strong note,” Stuart Hoffman, chief economist for the PNC Financial Services Group, said in a note to investors.
Retail sales were 3.7 percent higher than the same month of 2013, driven in large measure by healthy auto sales, which were 9.5 percent above the same month of last year.
The stronger-than-expected retail numbers have forecasters now rethinking the outlook for the coming months.
“It is clear that consumer spending and confidence weathered the unseasonably colder winter and shoppers are ready to open their wallets for big ticket items,” said Christopher. “Our real consumer spending growth for the first quarter is now standing at 2.1% due to the strong showing of retail sales in March and the upward revisions to January and February.”