Americans have started to splurge on discretionary items after a ho-hum winter season. This is well reflected in the pickup in retailers’ March sales, putting an end to three straight months of a decline. Consumer outlays rose on the back of a strong jobs market, rise in income, tax cuts, and refunds. Consumer optimism, by the way, continues to remain at a high level.
This calls for investing in consumer discretionary companies that are poised to grow on the signs of renewed consumer spending strength.
Sales at Retailers Pop
According to the Commerce Department, U.S. retail sales rose a solid 0.6% in March for the first time in four months. The so-called core retail sales that exclude food services, auto dealers, building-material stores and gasoline stations, also climbed 0.4%.
Sales rose at eight of 13 major retail categories. Auto dealers notched their best month since last November, up 2%. A recent report has shown pickup in purchases of cars and light trucks to a 17.4 million annualized rate in March, the fastest this year.
Sales at health and personal care stores went up 1.4%, the highest in two years. Internet retailers, food services and drinking places, and stores that sell home furnishing goods were some of the other big gainers. A rise in sales at U.S. clothing retailers also contributed significantly.
Easter holiday in the last weekend of March drove more traffic in stores. Thus, consumers ended a shopping hiatus and spent more money after lying low for a few months due to harsh winter weather conditions.
What Does the Retail Sales Uptick Indicate?
Such a pickup underlined the improved financial conditions of American households and also the resilience of the U.S. economic expansion that will turn nine years old at the end of June.
This increase in spending may not necessarily save the U.S. economy from a downshift in the first quarter, but, definitely indicates that the recent drop in consumer outlays is about to end.