By Lucia Mutikani ,Reuters
WASHINGTON — U.S. retail sales rose solidly in March as Americans shrugged off high gasoline prices and bought a range of goods, implying that economic growth in the first quarter was probably not as weak as many had feared. Total retail sales increased 0.8 percent, the Commerce Department said on Monday, after rising 1 percent in February. Last month’s gains, which surpassed economists’ expectations of only a 0.3-percent rise, could prompt analysts to raise their first-quarter growth forecasts from an annual pace of around 2.5 percent currently. The economy grew at a 3 percent rate in the fourth quarter. “It’s a clear sign that U.S. consumer spending remains strong. On balance I think it’s the latest sign here that the U.S. economy is outpacing a lot of its major counterparts in recovery,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
However, the growing optimism over the economy was tempered by a separate report showing that manufacturing in New York state slowed sharply this month as shipments of goods weakened. Factories, however, hired more workers and received higher prices for their goods, giving the report a mixed tone. The New York Federal Reserve Bank said on Monday its “Empire State” manufacturing activity index fell in April to 6.56, the lowest reading in five months, from 20.21 in March. “We’ll have to see if that’s a one-off or the start of a trend. If manufacturing slows down, that will certainly be a headwind to the economy,” said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. U.S. stock index futures edged higher on the retail sales report, while prices for Treasury debt held their gains. The dollar extended gains against the euro and trimmed losses versus the yen.