Retail sales increase 0.7 in March
Core retail sales jump 1.1; February sales revised up

WASHINGTON, April 15 Reuters U.S. retail sales increased more than expected in March amid a surge in receipts at online retailers, further evidence that the economy ended the first quarter on solid ground.

The report from the Commerce Department on Monday, which followed news this month of robust employment gains in March and a pickup in consumer inflation, bolstered expectations that the Federal Reserve could delay cutting interest rates until September.

It prompted economists at Morgan Stanley to raise their gross domestic product GDP growth estimate for the first quarter to a 2.7 annualized rate from a 2.4 pace. The economy grew at a 3.4 rate in the fourth quarter.

The continued resilience of consumption is another reason to suspect the Fed will wait longer before starting to cut interest rates, which now we think won39;t happen until September, said Andrew Hunter, deputy chief U.S. economist at Capital Economics.

Retail sales rose 0.7 last month, the Commerce Department39;s Census Bureau said. Data for February was revised higher to show sales rebounding 0.9 instead of the previously reported 0.6.

Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, would rise 0.3 in March. Sales jumped 4.0 on a yearonyear basis in March.

Despite higher inflation and borrowing costs, spending is continuing to hold up,…