Retail Sales Rise Best in Six Months

After a frugal March, U.S. consumers hit car dealer lots and stores with a vengeance in April and pushed retail sales up by 1.2 percent, the biggest increase since last fall, the government said on Tuesday in a report that brightened the outlook for the economy's continued recovery.

The Commerce Department said retail sales in April rose 1.2 percent to a seasonally adjusted $300.27 billion, while sales outside of autos rose 1.0 percent. The gain in overall sales was the biggest since October, when sales surged 6.2 percent as shoppers returned to malls after a lull caused by the Sept. 11 attacks on New York and Washington.

The numbers suggest that consumers — the lifeblood of the economy — are helping to support the budding economic recovery by keeping their pocketbooks and wallets open.

The April advance came after retail sales nudged up by 0.1 percent in March and was much larger than had been expected by Wall Street economists. The advances also may ease concerns about the strength of the economy's rebound from the shallow recession it entered in 2001. Federal Reserve officials have been wary of raising interest rates to head off inflation until they are convinced the recovery has taken root firmly.

Consumers, whose spending accounts for two-thirds of all economic activity in the United States, snapped up cars, building materials, garden supplies and health care and beauty products last month. They also ate out more.

Higher prices at the pump for gasoline also contributed to the increase in overall retail sales in April.

However, excluding sales at gasoline stations and at car dealerships — which tend to bounce around from month to month — retail sales still rose a solid 1 percent.

The strong showing last month came despite the fact that the nation's unemployment rate jumped to an eight-year high of 6 percent during the month. And, there was unseasonably cold weather and the Easter fell in March this year.

Tuesday's report showed that car sales went up 1.9 percent in April, following a 0.8 percent decline in March. Sales of building materials and garden supplies rose 2.7 percent, on top of a 1.7 percent gain.

At health and beauty stores, sales rose 1.9 percent, a turnaround from the 0.5 percent drop in March. Sales at clothing stores rose 0.7 percent, compared with a 0.3 percent dip. At department stores, sales increased 1.2 percent, after edging up 0.1 percent.

Sales at gasoline stations rose 2 percent, following a 4 percent increase. Increases in recent months reflect higher prices at the pump.

At bars and restaurants, sales rose 0.6 percent, after being flat.

Sales of electronics and appliances nudged up 0.1 percent, after being flat in March.

There were some weak spots. Sales of furniture and home furnishings dropped by 1.4 percent, following a 0.1 percent decline the previous month. Sporting goods stores saw sales dip 0.1 percent, after a 0.6 percent increase.

Concerns about how consumers, who kept on spending during the recession, will hold up during the recovery was a factor in the Federal Reserve's decision May 7 to keep short-term interest rates — now at 40-year lows — unchanged.

The Fed has held rates steady at all three of its meetings this year and many analysts say the central bank will not begin to push rates higher until fall, after unemployment peaks and begins to improve.

Economists expect the nation's jobless rate will top out at around 6.5 percent in June or July.

Economists worry that rising unemployment might make consumers scale back. Low interest rates, however, might persuade them to keep on buying and help along the economic recovery.

Last week, the nation's largest retailers, including Wal-Mart and Target, said April's sales were dampened by cool weather and the earlier Easter, making shoppers less inclined to hit the malls.

Reuters and the Associated Press contributed to this report.