U.S. retail sales increased for the ninth consecutive month in March, as consumers spent more money on costly gasoline.
Overall retail sales rose 0.4 percent in March, slightly less than expected, compared with a 1.1 percent gain in February, according to the U.S. Commerce Department.
Retail and food services sales, excluding autos, were up 0.8 percent compared with a 1.1 percent increase in February. Sales at gasoline stations, which comprise about 10 percent of total retail sales, jumped 2.6 percent, while auto sales dropped 1.7 percent.
Though retail sales continue to rise the mix of spending is not favorable, said Adolfo Laurenti, deputy economist at Chicago-based Mesirow Financial Holdings Inc.
“There is a big jump in spending on gasoline. This is not a good sign because higher energy is like a tax,” Laurenti said. “Most of the gasoline is imported so increased spending on gasoline..does not create jobs or have other economic spillovers,” he added.
Nationally, the average price of a gallon of self-serve regular gasoline rose to $3.76 this week, according to the Lundberg Survey, up 20 cents from $3.57 in the previous survey on March 21.
While consumers spend more on gasoline, they’re not spending as much on food. Sales at food and beverage stores increased 0.1 percent in March compared with a 0.7 percent increase in February.
Still, Bob Johnson, director of economic analysis at Morningstar Inc., saw “extremely positive” signs of increased consumer confidence in the retail sales report.
“Two categories were particularly strong; anything related to your home you currently own and restaurant spending,” he added. Furniture sales rose 3.6 percent in March and sales of building supplies sales also increased.
“These are great numbers and people might not be buying more houses but they are spending more money on their current houses,” said Johnson. “The other positive is increased restaurant sales which were up 1 percent in the month following a 1.8 percent gain in the previous month so those are healthy gains and are indicative of consumer confidence.”
Johnson attributed the decrease in auto sales to monthly variations and incentive programs. “If you look at the overall quarter auto sales are pretty much at the same rate as retail sales growth rate of about 7 to 8 percent a year.”