Watch CBSN Live

Retail sales notch biggest gain since September 2012

WASHINGTON - U.S. retail sales in March rose by the largest amount in 18 months, led by strong gains in sales of autos, furniture and a number of other products.

The Commerce Department said Monday that retail sales rose 1.1 percent in March, to nearly $434 billion, the best showing since September 2012 and 3.8 percent higher than the year-ago period. Economists had forecast growth of about 0.9 percent. The government also revised February to a 0.7 percent gain, more than double its previous estimate.

Sales had fallen in January and December. Sales of autos climbed 3.1 percent while sales at general merchandise stores, a category that covers retailers such as Walmart and Target and department stores, increased 1.9 percent, the strongest one-month gain since March 2007, before the country went through the recession.

The strong March gain was evidence that the economy is emerging from a harsh winter with some momentum.

"The 1.1 percent [month-over-month] leap in U.S. retail sales in March is partly due to households making up for lost time after the unusually bad weather kept them away from the malls in previous months," said Paul Dales, senior U.S. economist with Capital Economics, in a research note.

The strong March gain provides more evidence that the economy is emerging from a harsh winter with some momentum. Economists believe that warmer weather will encourage people to make purchases that they had not during a wave of winter storms.

Consumers account for 70 percent of U.S. economic activity, so spending on that front is critical in fueling a stronger recovery.

Overall economic activity, as measured by the gross domestic product, likely slowed significantly in the January-March quarter, to somewhere between 1.5 percent and 2 percent. But analysts are looking for a strong rebound in the current April-June quarter, with some forecasting growth of around 3 percent and similar strong readings for the rest of the year.

"The surge in March came too late to prevent slowing in Q1 as a whole, but the pattern points to much more strength in Q2," said Jim O'Sullivan, chief U.S. economist with High Frequency Economics, in a client note.

For March, sales in a core category of products that feed into the government's calculations of overall growth rose by 0.9 percent, more than double the 0.5 percent gain in February. In addition to the strong showing for auto dealers and general merchandise stores, sales increased by solid amounts at furniture stores, hardware stores and clothing stores.

Stronger growth is expected to translate into more hiring and an improving labor market. In March, the economy reached a milestone that was a long time coming. All of the private-sector jobs lost during the recession were recovered. Private businesses shed 8.8 million jobs during the 2007-2009 economic downturn. With the March gains, they have now hired 8.9 million workers. Government jobs are still below prerecession levels.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.