Healthy US retail sales edges rate rise closer

US retail sales rose in March for the first time since late last year as consumers stepped up purchases of automobiles and other goods, suggesting a sharp slowdown in economic growth in the first quarter was temporary.

The Commerce Department’s report together with other data showing producer inflation crept up last month should keep the Federal Reserve on track to start raising interest rates later this year.

“A rebound in retail sales in March provides evidence that the US economy is pulling out of a soft patch seen at the start of the year. The improvement in retail sales after the weakness seen at the turn of the year adds to the likelihood of policymakers voting to hike rates this year,” said Chris Williamson, chief economist at Markit in London.

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Retail sales increased 0.9 per cent in March. That was the largest gain since March last year and snapped three straight months of declines that had been blamed on harsh winter weather.

US stock index futures fell after the data, while prices for US government debt rose. The dollar was weaker against a basket of currencies.

Retail sales excluding automobiles, gasoline, building materials and food services rose 0.3 per cent after dropping 0.2 per cent in February. The core retail sales correspond most closely with the consumer spending component of gross domestic product.