Retail Sales Increase 0.6% in March

U.S. retail sales bounced back in March from a February decline and consumer sentiment brightened early this month with help from a strong labor market, a series of reports on Thursday showed.

The Commerce Department said overall retail sales rose 0.6% last month after a revised 0.8% fall in February that initially had been reported as a much steeper 1.4% drop.

New-car sales were up 1.6% last month, partly recovering from a 2.8% drop in February.

Brighter consumer spirits appeared to carry over into the second quarter, according to a subscriber-only report by the University of Michigan that sources said showed its preliminary April index of consumer sentiment at 89.2, up from March’s final reading of 88.9.

Retail sales in March excluding new cars and parts rose 0.4%, more than recovering a revised 0.3% fall in February that had initially been reported as a 0.6% decline.

Separately, the Labor Department said new claims for unemployment benefits rose by an unexpectedly large 12,000 last week to 313,000.

But a broader, four-week moving average that smooths weekly volatility to give a better picture of underlying conditions told a different story, contracting 1,500 last week to 307,500.

Another report from the Labor Department showed that prices for imported goods fell unexpectedly by 0.4% in March as natural-gas costs dropped sharply and petroleum prices fell. It was the third decline in the last four months and followed a 0.5% fall in February.

Analysts said consumers, who fuel two-thirds of national economic activity through their spending on goods and services, showed no sign of pulling back.

“It’s really great for the economy when people get out there and spend, spend, spend, and that’s what they did in March,” said economist Joel Naroff of Naroff Economic Advisors in Holland, Pa.

Steve Ricchiuto of ABN Amro in New York also said that after the February revisions, retail sales appeared healthier than previously thought.

But he added: “It’s a bit of a mixed message because we have some evidence here that growth is strong, but maybe the labor market is not as strong as we thought, and inflation is maybe not as strong too.”

A separate mid-morning report from the Commerce Department said business inventories in February were flat after rising 0.6% in January.

Business sales fell 0.6% in February after climbing 1.2% in January so that the inventory-to-sales ratio edged up to a still relatively lean 1.26 months from 1.25 months.

The ratio is a gauge of how long it would take to deplete stocks at the current sales pace and, as such, is a measure of how likely it is that factories will have to keep churning out goods to meet demand.