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Retail sales increase 0.7%, a 3-month high

April 17, 2007|From the Associated Press

WASHINGTON — Retail sales rose in March at the fastest clip in three months, helped by warmer weather and an early Easter.

Analysts said sales were likely to slow in April, given the recent surge in gasoline prices that will leave people with less money to spend on other items.

For March, sales rose 0.7%, the Commerce Department reported Monday. And the government revised its estimate for sales in February from a lackluster 0.1% rise to a 0.5% gain.

The March increase, the strongest since a 1.1% rise in December, was helped by the fact that Easter came eight days earlier than last year, boosting shopping in March. Warmer weather during the month put consumers in a buying mood after a cold and snowy February.

Some giant retailers are already warning that April is proving challenging. Consumer confidence has been faltering because of the continued slump in home prices in much of the U.S. and the surge in gasoline costs.

Wal-Mart Stores Inc. said April's selling environment would be tough, while Federated Department Stores Inc. said its first-quarter sales would come in at the low end of expectations.

Still, economists said it was a good sign for the overall economy that retail sales have held up as well as they have.

"Consumer spending continues to soldier forward in spite of higher gasoline prices and a sharp slide in consumer sentiment," said Brian Bethune, an economist at Global Insight.

Consumer spending, which accounts for two-thirds of total economic growth, will slow to about 2.1% in the April-June period and rebound to around 2.5% in the second half of the year, Bethune predicted.

The overall increase in retail sales last month reflected in part the higher price for gasoline. Sales at gasoline stations surged 3.1% in March.

Sales at general merchandise stores, which includes department stores, rose 1.1% last month while sales at specialty clothing stores were up 2.4%.

Auto sales rose 0.4%. Excluding autos, sales rose by 0.8%.

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