The Commerce Department released the retail sales report for March today and showed a better than expected reading of a 0.8 percent increase for the month. Many economists had been forecasting growth of just 0.3 percent. This follows on the heels of February’s gain of 1.0%. This could lead to analysts to raise their forecasts for first quarter consumer spending, which is the main driver of the economy.
The rise in sales last month was broad, across multiple sectors. This is in spite of Americans paying 27 cents more per gallon of gasoline than they did the previous month. So far, consumers appear to be taking rising gasoline prices in stride, due to a mild winter that has cut heating bills. Motor vehicle sales rose 0.9 percent after increasing 1.3 percent in February. Auto sales have accelerated in recent months, boosted by increased demand by households. The earthquake and tsunami in Japan caused disruptions to auto production last year and left dealers short on inventory that consumers wanted to buy. Excluding autos, retail sales climbed 0.8 percent last month after advancing 0.9 percent in February.
Stocks are mixed today following the encouraging report. Some of the declines have been lead by Apple, which has fallen 3%, the longest decline since October, on concern mobile-phone carriers may cut subsidies for the iPhone. Verizon Wireless, a U.S. partner of Apple,said last week that it will begin charging customers $30 to upgrade to a new phone. The move suggests mobile-phone service providers may take other steps, including trimming subsidies, to keep sales of the iPhone from eating into their margins. Analysts at Wedge Partners said in an April 13 research note that demand for the newest version of Apple’s iPad is beginning to wane, citing the prospect that Apple’s earnings report, due next week, will show sales of the tablet missed analysts’ predictions last quarter. Apple, based in Cupertino, California, has added $400 billion in market value since 2008, making it the world’s most valuable company.
The S&P 500 rose less than 0.1 percent to 1,370.51 at 1:08 p.m. New York time. The Dow Jones Industrial Average gained 86.24 points, or 0.7 percent, to 12,935.83. The Nasdaq Composite Index (CCMP) slumped 0.7 percent to 2,990.13. Trading volume for S&P 500 companies was 3.1 percent below the 30-day average.