Washington - US retail sales rose solidly in March as Americans shrugged off high petrol prices and bought a range of goods, implying economic growth in the first quarter was probably not as weak as many had feared.
Total retail sales increased 0.8%, the commerce department said on Monday, after rising 1.0% in February.
Last month's gains, which surpassed economists' expectations for only a 0.3% rise, could prompt analysts to raise their first-quarter growth forecasts from an annual pace of around 2.5% currently.
The economy grew at a 3.0% rate in the fourth quarter.
"It's a clear sign that US consumer spending remains strong.
"On balance I think it's the latest sign here that the US economy is outpacing a lot of its major counterparts in recovery," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
However, the growing optimism over the economy was tempered by a separate report showing that manufacturing in New York state slowed sharply this month as shipments of goods weakened.
Factories, however, hired more workers and received higher prices for their goods, giving the report a mixed tone.
The New York Federal Reserve Bank said on Monday its "Empire State" manufacturing activity index fell in April to 6.56, the lowest reading in five months, from 20.21 in March.
"We'll have to see if that's a one-off or the start of a trend. If manufacturing slows down, that will certainly be a headwind to the economy," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.
US stock index futures edged higher on the retail sales report, while prices for Treasury debt held their gains. The dollar extended gains against the euro and trimmed losses versus the yen.Broad-based sales gain
The rise in sales last month was broad-based, even though Americans paid 27 cents more per gallon of petrol than the previous month.
So far Americans appear to be taking rising petrol prices in their stride, thanks to a mild winter that has cut heating bills for households.
Motor vehicle sales rose 0.9% after increasing 1.3% in February. Auto sales have accelerated in recent months, boosted by pent-up demand by households.
A devastating earthquake and tsunami in Japan caused disruptions to auto production last year and left dealers without models that consumers wanted to buy.
Excluding autos, retail sales climbed 0.8% last month after advancing 0.9% in February.
Elsewhere, petrol sales receipts increased 1.1% after rising 3.6% in February. Excluding autos and petrol, sales advanced 0.7% in March, adding to the prior month's 0.5% gain.
Details of the report showed some strength, suggesting consumer spending will continue to support growth.
Last month clothing store receipts rose 0.9%, while sales at building materials and garden equipment suppliers jumped 3.0% - the largest gain since December.
Unseasonably mild weather has helped to boost sales at clothing retailers as well as purchases of building materials and garden equipment.
So-called core retail sales, which exclude vehicles, petrol and building materials, rose 0.5% after increasing by the same margin in February.
Core sales correspond most closely with the consumer spending component of the government's gross domestic product report.
Sales at restaurants and bars edged up 0.3%, while receipts at sporting goods, hobby, book and music stores rose 0.5%. Sales of electronics and appliances increased 1.0%, the largest gain since October, while receipts at furniture stores climbed 1.1%.