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U.S. retail sales rebounded in March after three straight monthly declines as households boosted purchases of motor vehicles and other big-ticket items, suggesting consumer spending was heading into the second quarter with some momentum.

Economists saw a limited impact on retail sales for now from a recent ebb in consumer sentiment, citing a robust labour market, which is steadily pushing up wage growth.

Consumer sentiment slipped in early April as households worried about the potential impact of the Trump administration’s trade policies on the economy. Fears of a trade war between China and the United States have roiled financial markets.

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“The trade war and battered stock market may yet cause the consumer to temper their consumption expenditures, but for the moment, the sun is out and shining,” said Chris Rupkey, chief economist at MUFG in New York. “Consumers are doing their part to drive the economy forward as they restart their engines from a cold and snowy winter.”

The Commerce Department said on Monday retail sales increased 0.6 per cent last month after an unrevised 0.1 per cent dip in February. January data was revised to show sales falling 0.2 per cent instead of the previously reported 0.1 per cent drop.

Economists polled by Reuters had forecast retail sales rising 0.4 per cent in March. Retail sales in March increased 4.5 per cent from a year ago.

Excluding automobiles, gasoline, building materials and food services, retail sales rose 0.4 per cent last month after being unchanged in February. These so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, were previously reported to have risen 0.1 per cent in February.

U.S. financial markets were little moved by the data as investors watched geopolitical developments. U.S. stocks rose on waning fears that the weekend’s U.S.-led missile attack on Syria would escalate into a broader conflict. U.S. Treasury prices fell and dollar weakened against a basket of currencies.

SLOW FIRST-QUARTER SPENDING

Last month’s pickup in core retail sales did little to change expectations of a sharp slowdown in consumer spending in the first quarter.

Economists largely blame the weakness in retail sales at the start of the year on delays in processing tax refunds. Some also argue that income tax cuts, which came into effect in January, only reflected on most workers’ paychecks in late February. “The large swing in consumption between February and March is consistent with an important role for household after-tax incomes being restrained and then lifted by a unique pattern of tax refunds and withholdings,” said Michael Feroli, an economist at JPMorgan in New York.

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“We believe those forces will remain supportive for consumption in the second quarter, and after today’s number remain comfortable with prospects for a rebound in household outlays this quarter.”

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a robust 4.0 per cent annualized rate in the fourth quarter. It is expected to have slowed to below a 1.5 per cent rate of increase in the first quarter.

Economic growth estimates for the January-March quarter are running below a 2 per cent rate. The economy expanded at a 2.9 per cent pace in the October-December quarter. The government will publish its advance estimate for first-quarter GDP growth later this month.

In March, auto sales jumped 2.0 per cent, the largest increase since last September, after declining 1.3 per cent in February. Sales at furniture stores climbed 0.7 per cent while those at electronics and appliance stores increased 0.5 per cent.

But sales at building material stores fell 0.6 per cent last month and receipts at clothing stores dropped 0.8 per cent. Sales at online retailers increased 0.8 per cent. Sales at restaurants and bars gained 0.4 per cent. Receipts at sporting goods and hobby stores dropped 1.8 per cent.

While the stock market volatility has not yet impacted on consumer spending, it is chipping away at business confidence.

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In a separate report on Monday, the New York Federal Reserve said its Empire State index tumbled seven points to a reading of 15.8 in April. The survey’s measure of future business conditions dropped to a more than two-year low.

“This month’s decline in the Empire State six-month forward index may reflect trade-related uncertainties and the associated volatility of stocks, or other factors,” said Roiana Reid, an economist at Berenberg Capital Markets in New York.

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