Consumer spending posts spring rebound

Consumers came out of a four-month hibernation in March, a good sign for the economy after a sluggish start to the year.

Retail sales rose 0.9 percent last month, bouncing back from a 0.5 percent drop in February, the Commerce Department said Tuesday.

{mosads}“This is welcome improvement after severe winter weather weighed on retail sales for the last several months,” said Jack Kleinhenz, chief economist for the National Retail Federation.

Better weather and an early Easter contributed to the uptick in spending. Sales rose for autos, furniture, clothing and building materials.

“Both the composition and the magnitude of March’s rebound shows that consumers have thawed out of the harsh winter weather and returning to spending habits,” Kleinhenz said.

Auto sales were up 2.7 percent, spending on building materials rose 2.1 percent, clothing purchases increased 1.2 percent and furniture purchases were 1.4 percent higher.

Spending at restaurants increased slightly by 0.7 percent. But over the past year, spending is up 7.7 percent, helping to fuel the service sector’s growth.

Meanwhile, spending on building materials spending rose 6.3 percent from last year.

The report is closely watched because consumer spending accounts for about 70 percent of the economy.

Removing the volatile sectors — autos, gas, building materials and restaurants — sales rose 0.3 percent.

The pace of hiring slowed over the cold winter after the economy added more than 3 million jobs last year.

The unemployment rate fell to 5.5 percent in recent months, but employers added only 126,000 jobs in March, well below expectations, and the least since December 2013.

Economists expect jobs and growth to pick up for the rest of the year.

“Though consumers will continue to spend on a selective and price sensitive basis, we expect stronger second quarter growth as jobs and income growth pick up,” Kleinhenz said.

Sales at gas stations fell 0.6 percent while electronics stores saw sales slip 0.5 percent last month.

A recent separate Commerce Department report had shown that consumer spending rose only 0.1 percent in February.