March Retail Sales Top Estimates, NY Manufacturing Edges Up

U.S. retail sales rose slightly more-than-expected in March and far more than earlier reported in February while manufacturing in the New York region was weaker than expected after hitting a two-month low, reports out on Monday showed.

Retail sales rose by 0.7% as warmer weather and an earlier-than-usual Easter holiday encouraged shoppers in March.

Excluding automobiles and parts, sales were up a somewhat smaller-than-expected 0.8%, according to the Commerce Department report.

"It's a good solid report, it certainly suggests that first-quarter GDP is going to be at least 2%, could be a little more" said Charles Lieberman, chief investment officer at Advisors Capital Management LLC in Paramus, New Jersey.

"The consumer continues to be the linchpin of the economy," he added.

Sales for February were revised up sharply and economists took this as a good sign the consumer -- which fuels two-thirds of economic growth -- is still going strong.

Excluding gasoline, sales were up 0.4% in March after rising by the same margin the prior month.

U.S. Treasury debt prices rose briefly on Monday before turning downward. U.S. stocks were set to open higher.

The latest retail sales figure left economists expecting first-quarter economic growth may be stronger than first thought, particularly after the strong upward revisions to the February sales numbers.

"The retail sales are pretty impressive, especially when you factor in the upward revision -- the economy has much more upward momentum than people had originally believed," said Mark Vitner, economist at Wachovia Securities in Charlotte, North Carolina.

Economists polled ahead of the report were expecting retail sales to advance 0.6% overall and 0.9% excluding automobiles. Figures for the prior month were revised up, to a 0.5% rise in overall sales from the scant 0.1% reported initially. Excluding autos, sales were revised to a 0.4% gain in February from a 0.1% fall.

"It's not the breakneck pace we saw earlier in the expansion, but slowing to trend is not a recession," said Michael Darda, chief economist at MKM Partners LLC in Greenwich, Conn.

In March, it was a 3.1% boost in gasoline prices that helped push up retail sales.

Sales of motor vehicles and parts advanced 0.4%, after a 0.9% rise in February.

Meanwhile, sales at electronic and appliance stores were down 1.9%, while department store sales were down 0.2%. Clothing sales rose 2.4%.

New York Manufacturing Rises

A separate report on Monday released by the New York Federal Reserve showed manufacturing activity in New York state factories rose slightly in April after hitting a nearly two-year low the prior month.

The New York Fed's "Empire State" general business conditions index for the factory sector edged up to 3.80 in April from 1.85 in March. Economists polled by Reuters had expected an April reading of 7.5.

The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions.

Meanwhile, separate data from the Treasury Department showed that foreign investment in U.S. long-term securities was down significantly in February from a month earlier.

Foreign investment in short-term securities, such as Treasury bills, was up.