US retail sales defy housing slump

US retail sales defy housing slump
By Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: April 16 2007 15:47 | Last updated: April 16 2007 15:47


US retail sales rose more than expected last month in a sign that consumers continue to spend despite the housing slump and high energy prices.

Sales rose 0.7 per cent in March while the Commerce Department said purchases in the previous month were also stronger than initially thought.

The strongest gain in three months is likely to provide some additional encouragement to the Federal Reserve that consumer spending, which accounts for more than two-thirds of the economy, will continue to drive economic growth.

But David Greenlaw, an economist at Morgan Stanley, cautioned that it would be another month before the underlying spring sales trend was clear.

Spending shifted from Christmas winners such as electronics chains, department stores and websites to retailers selling clothing, which saw a 2.4 per cent sales increase, and sporting goods, which saw a 1.1 per cent sales rise.

There was also a 1.4 per cent in sales pick up at DIY and gardening stores, in a welcome sign for a sector that has been hit by lower residential investment as home price increases slow.

Sales last month were also lifted by gas receipts as prices at the pump rose rose to $2.56 a gallon in March from $2.26, according to the American Automobile Association.

Gas station receipts rose 3.1 per cent after a 1.5 percent gain the prior month, the Commerce Department said.