Sales at U.S. retailers rose less than forecast in March after being depressed by harsh winter weather, signaling consumers are intent on not overextending themselves.
Purchases increased 0.9 percent, the first gain in four months, after a 0.5 percent drop in February, Commerce Department figures showed Tuesday in Washington. The median forecast of 87 economists surveyed by Bloomberg called for a 1.1 percent advance.
The figures show Americans remain focused on shoring up savings even as employment and confidence firm and inflation remains low. A boost in wage growth may be what’s needed to drive households to loosen their purse strings and sustain a pickup in growth after a first-quarter slowdown mainly caused by unusually harsh winter weather.
“We are looking for a bit of a weather recovery,” Gennadiy Goldberg, a strategist at TD Securities LLC in New York, said before the report. “It’s a bit of pent-up demand.”
Estimates for retail sales in the Bloomberg survey ranged from advances of 0.2 percent to 1.7 percent. February’s reading was revised from an initially reported 0.6 percent decrease.
Even though the March increase was smaller than projected, it was the biggest advance in a year.
Another report showed the producer price index rose 0.2 percent in March, matching the median forecast of economists surveyed by Bloomberg, after a 0.5 percent drop the prior month, according to figures from the Labor Department. Over the past 12 months, wholesale costs fell 0.8 percent. The PPI excluding food and fuel also climbed 0.2 percent from a month earlier.
The Commerce Department’s sales report showed demand climbed in nine of 13 major retail categories last month. A rebound in sales at auto dealers paced the increase.
Car purchases climbed 2.7 percent in March, the biggest gain in a year. The auto figures are in line with industry data.
Cars and light trucks sold at a 17.1 million annualized rate in March, matching the strongest pace since August, figures from Ward’s Automotive Group show.
“The first quarter saw a string of mixed economic data,” Emily Kolinski Morris, chief economist at Dearborn, Michigan- based Ford Motor Co., said on an Apr. 1 sales and revenue call. “We expect a firming labor market and still-low fuel prices and interest rates to support renewed momentum in economic activity as spring takes hold.”
Retail sales excluding autos rose 0.4 percent after being little changed in February, today’s report showed. They were projected to rise 0.7 percent, according to the Bloomberg survey median.
Core sales, the figures that are used to calculate gross domestic product and which exclude such categories as autos, gasoline stations and building materials, climbed 0.3 percent last month after a revised 0.2 percent decrease in February that had previously been recorded as little changed.
Furniture stores, building-material outlets, general merchandise retailers and restaurants were among the categories showing rebounds in demand in March after poor weather hurt sales the prior month.
Electronic stores saw a drop in sales as did service stations even though gasoline prices firmed last month.
Consumers are being circumspect in spending the savings from lower fuel costs. The average price of a gallon of regular gasoline was $2.41 a gallon on the last day of March, according to AAA, the biggest U.S. auto group. While higher than the February average of $2.24, it’s still far short of last year’s high of $3.70.
Another unexpected area of weakness last month was at food and beverage stores, which showed a 0.5 percent drop in purchases, the biggest since April 2013.
An improving job market is likely to help underpin demand. Applications for jobless benefits are reaching their lowest levels in more than a decade. An average 282,250 workers a week filed claims in the month ended April 4, the fewest since June 2000.
Job openings climbed to a 14-year high of 5.1 million in February, according to Labor Department figures released last week. Progress on filling those positions was interrupted last month as employers added 126,000 workers, the smallest gain since December 2013.
The weaker-than-projected advance ended a 12-month streak of increases of 200,000 or more.
Sluggish income growth still is holding back the consumer spending that makes up almost 70 percent of the economy even as energy costs decline. Wages posted a 2.1 percent year-over-year increase in March, barely above the 2 percent average since the recession ended almost six years ago.
At the same time, household purchases are projected by economists to climb this quarter at a 3.5 percent annualized pace after 2 percent gain in the first three months of the year, according to a Bloomberg survey conducted April 3-8.
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