Retail sales for March continued to climb, the U.S. Census Bureau reports. In fact, last month’s seasonally adjusted 0.4% rise in U.S. retail and food services sales was the ninth consecutive monthly increase.
March’s gain was the smallest advance since the upward momentum began, but the positive trend is still intact. Does that make it easier to answer “yes” to the question we posed yesterday on the broad economic trend: “Will The Growth Momentum Last?” One reason for staying cautious on responding: after deducting sales figures from gasoline stations last month, retail sales edged up a scant 0.1% in March.
But let’s recognize too that oil prices fell sharply yesterday, and so the energy pinch may ease up in the weeks and months ahead. Even before the retreat in commodities prices, there was still reason for optimism. “It does look like the consumer is hanging in there in the face of higher energy prices,” Nicholas Colas, chief market strategist at the Convergex Group, tells Reuters. “That they wouldn’t was everyone’s concern.”
State Street’s senior fixed-income strategist agrees. “The consumer was more resilient in March than some of our concerns,” John Herrmann advises via Bloomberg. “Improving labor-market conditions are helping support consumption. This is a very impressive pace of spending, with gains across a diverse range of products,” he says.
Nonetheless, most of March’s economic reports still lie ahead and so it’s unclear how the full economic profile for last month will unfold. The good news is that the numbers that have been released so far are encouraging, including the news from the jobs front. Private nonfarm payrolls posted a relatively strong rise last month. Meanwhile, average weekly hours worked for production and nonsupervisory employees inched higher in March to 33.6—the highest since September 2008. The labor market is far from healed, but the modest rebound of late appears to be rolling ahead.
There are also signs that bank lending continues to revive, albeit from depressed levels. The total of reported commercial and industrial loans at large banks was nearly $630 million for the week through March 30, according to the Federal Reserve. That’s 1.5% higher from a month earlier and 2.8% above levels from a year ago, offering more evidence that economic activity continues to improve, if only marginally.
If there’s a joker in the deck, it may show up in tomorrow’s weekly update on initial jobless claims or Friday’s news on consumer price inflation for March. The consensus outlook among economists for both reports, however, calls for little or no changes from the previous numbers, according to Briefing.com.
Steady as she goes…