Rising Price of Oil Pushes Retail Sales, PPI Up in March

Two economic reports released Friday offered mixed signals about the economy, as retail sales increased 0.2% in March and the producer price index rose 1%. The final numbers in both reports were clouded by the recent spike in oil prices.

The Commerce Department said that March’s increase in sales to $297.34 billion was equal to February’s rise, but excluding gasoline, sales were unchanged. Sales at gas stations jumped 3.8% during the month.

Almost all trucking operations depend on the health of retail sales because it involves nearly every type of cargo. Consumer spending accounts for two-thirds of all economic activity.

Analysts had expected retail sales to increase 0.4%, Bloomberg said. Sales of furniture, clothing and automobiles all declined, and this had analysts wondering if economic momentum had slowed even more than predicted toward the end of the first quarter.

Sales at electronics and building materials stores were among the areas that saw small increases in March.

Meanwhile, the Labor Department said the 1% gain in the PPI, which measures price pressures before they reach the consumer, was the highest jump in 14 months, reflecting higher energy prices. Labor noted the price of trucks also rose in March.

Normally, a rising PPI shows stronger demand for goods and means more shipments for trucking companies, but also could lead to a cut in interest rates.

However, excluding the volatile food and energy sectors, wholesale prices only rose 0.1%, showing there is little reason to worry about inflation yet, Bloomberg said.

Recent economic reports, including these two, have forced economists to lower their expectations for growth in the first quarter, Reuters said. While many thought gross domestic product could grow at a 5% pace, most have backed off that prediction.

However, there could be a bright side to slower growth. It could keep lid on prices and ease pressure on the Federal Reserve to raise interest rates soon. While it is expected to hike rates this year, the timing is widely debated, Bloomberg said.

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