(Bloomberg) -- U.S. retail sales jumped by the most since September 2017 as gains in motor vehicles and gasoline stations boosted sales, signaling consumers are giving the economy greater support.
The value of overall sales in March rose 1.6 percent after an unrevised 0.2 percent decrease the prior month, according to Commerce Department figures released Thursday. That exceeded all forecasts in Bloomberg’s survey calling for a 1 percent gain. A separate report Thursday from the Labor Department showed filings for unemployment benefits fell last week to a fresh a 49-year low.
With first-quarter gross domestic product figures due April 26, the surprisingly strong retail report may spur economists to further increase projections. Analysts raised economic growth forecasts for the period Wednesday after a report showing the trade deficit unexpectedly narrowed in February.
The stronger data signal consumers may continue to drive the expansion amid solid wage gains, low unemployment, and policy makers indicating interest rates will remain on hold this year. The rebound, after a December plunge, may help offset an inventory overhang that’s poised to weigh on growth later this year.
Automobile dealer sales rose 3.1 percent, the most in 18 months, after a drop the prior month. Industry data from Ward's Automotive Group previously showed unit sales rebounded in March.
Twelve of 13 major retail categories increased. Sales at clothing stores increased 2 percent, the most since May, while food services posted a 0.8 percent gain, the best since July. Nonstore retailers held up with a second-straight 1.2 percent rise, as sporting goods and hobby stores saw the lone decline.
Federal Reserve officials, who have signaled they will remain patient on any policy rate changes amid low inflation and gathering uncertainty, will be watching for indications whether consumer spending gains are likely to be sustained over time.
Sales in the “control group” subset, which some analysts view as a cleaner gauge of underlying consumer demand, climbed 1 percent and topped projections. The measure excludes food services, car dealers, building-materials stores and gasoline stations.
The Labor Department report showed initial jobless claims fell last week to 192,000, the lowest since September 1969. Economists had projected an increase.
Sales at filling-stations increased 3.5 percent, in line with the prior month, the report showed, as oil prices rallied. Another Labor Department report this month showed gas prices rose 6.5 percent in March, the most since September 2017.
- Excluding automobiles and gasoline, retail sales rebounded with a 0.9 percent rise after a drop the previous month.
- Estimates in the Bloomberg survey for retail sales ranged from a 1.3 percent gain to 0.1 percent rise.
- January retail sales were revised up to a 0.8 percent gain from a 0.7 percent rise.
- The retail-sales data capture just under half of all household purchases and tend to be volatile. March personal-spending figures, which detail consumer purchases, will offer a fuller picture of U.S. consumer spending at the end of the month.
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