US retail sales rose more than expected in March amid a surge in earnings in the online retailer sector. This is further proof that the economy ended the first quarter on a strong note.
Retail sales rose by 0.7% last month, according to the Census Bureau's Commerce Department, as announced on Monday. Data for February was revised upwards to show sales rebounded by 0.9% compared to 0.6% as previously reported. Economists polled by Reuters had forecast retail sales, which are mostly goods and not adjusted for inflation, would rise by 0.3% in March.
The report follows news this month of a strong job increase in March, and bolstered expectations that the Federal Reserve may hold off on cutting interest rates this year.
The latest Bank of America Credit Card data shows that spending by low-income households still exceeds spending by high-income households.
"One important reason is that, although low-income consumers have been disproportionately affected by inflation, they have also been the biggest beneficiaries of a strong labor market," economists at Bank of America Securities found. "Low-income workers have seen the largest cumulative wage increases since the pandemic."
Average employment gains were 276,000 per month in the first quarter, compared with 212,000 in the October-December quarter. Although wage growth slowed, it was still above 4.0% year-on-year.
Retail sales excluding vehicles, gasoline, building materials, and food services increased by 1.1% in March. Data for February has been revised to show retail sales rose by 0.3% compared to unchanged as previously reported. Core retail sales involve the consumption expenditure component of gross domestic product most closely.
Although spending may slow from the rapid pace of the fourth quarter, it is likely to remain sufficient to support the economy in the January-March quarter. Estimated growth for the most recent first quarter was as high as an annual rate of 2.4%. The economy grew at a rate of 3.4% in the October-December quarter.
