Retail sales rise modestly

Wednesday, April 13, 2005 | 9:27 a.m.

WASHINGTON -- Retail sales rose by a modest 0.3 percent in March, the weakest showing since January, as prospects for stronger sales spurred by an early Easter were trumped by cold weather in much of the country and rising fuel costs.

The Commerce Department reported today that the March increase followed a stronger 0.5 percent sales increase in February and represented the smallest advance since a meager 0.1 percent rise in January. The increase was significantly below market expectations for a 0.8 percent surge in sales.

The strength last month came in auto sales which were up a strong 0.7 percent, the best showing since a 4.2 percent surge in sales last December. However, that strength was offset by a 0.7 percent decline at department stores and an even larger 1.9 percent drop at clothing specialty stores, weakness that was blamed on cold weather that did not put consumers in the mood to buy spring clothes.

The consumer has been the driving force powering the economy in the three years since the 2001 recession as Americans, bolstered by successive rounds of tax cuts and cheap credit, have spent with abandon.

Analysts say continued gains in employment should produce further spending increases this year. But those employment gains will have to offset the waning impact of tax cuts and rising interest rates. The Federal Reserve is expected to continue with its nearly year-long campaign of raising interest rates to make sure the rebounding economy does not produce unwanted inflation.

The strong 0.7 jump in sales of autos and auto parts in March followed a much weaker 0.1 percent increase in February.