By Siyuan Du
Retail sales for March increased for the first time since November, driven by strong auto sales, but the results fell short of expectations.
U.S. retail and food services sales, seasonally adjusted, increased 0.9 percent from February, when sales fell 0.5 percent, the U.S. Department of Commerce reported Tuesday. Economists had expected sales to rise 1 percent, according to Bloomberg.
“I think part of this is a rebound after the pretty bad readings we had over last few months,” said Gregory Daco, economist with Oxford Economics, in an interview.
“But with cold temperatures now in the rear view mirror and measures of confidence at their highest in this recovery, we believe household spending will make significant progress in the coming months,” Daco added in a report.
Sales of motor vehicles and parts increased 2.7 percent, while building materials and garden equipment rose 2.1 percent. Sales at both grocery stores and gasoline stations fell 0.6 percent.
[field name=”Auto sales for March”]
Economists pointed to weak core retail sales, which rose just 0.3 percent.
“If you look at the core sales numbers, which exclude autos, gasoline and building materials, the rebound is quite small,” said Avery Shenfeld, economist with CIBC World Markets.
The U.S. dollar weakened and the 10-year Treasury yield fell 0.02 percentage point to 1.89 percent, as traders bet that unimpressive sales would further delay any hike in interest rates from the U.S. Federal Reserve.
Strength in building materials suggest a pickup in home sales that could feed into retail sales this spring, economists at Comerica Bank wrote in a note.
Economists have been optimistic overall that consumer spending would pick up following a bad winter for most of the country.
“While we continue to think that U.S. consumer spending and GDP will pick up significantly in the second quarter, Fed officials will want to see concrete evidence before starting to hike interest rates,” Andrew Grantham, economist at CIBC World Market, wrote in a note.