WASHINGTON — Signs of a broad economic recovery were evident Wednesday in a trio of government reports that forecast brighter prospects for clothing stores and pushed retail shares and the major stock indices sharply higher.
Retail stocks rose 1.7 percent, or 7.86 points, to close at 480.25, the highest level since October 2007, and advanced for the fifth consecutive session. The general updraft boosted the S&P 500 1.1 percent, or 13.35 points, to 1,210.65, the first time that index has been above 1,200 since September 2008. The Dow Jones Industrial Average closed above 11,000 for the third straight day, increasing 0.9 percent, or 103.69 points, to 11,123.11.
The Commerce Department retail sales report said merchants posted strong gains in March, and the Labor Department Consumer Price Index revealed a modest decline in apparel prices despite fears of inflation.
Retailers across the U.S. also reported an uptick in consumer spending driven by increasing confidence levels, according to the Federal Reserve’s Beige Book survey. Most retailers said they were somewhat optimistic about sales in the coming months.
Merchants said consumers were willing to buy the right product at the right price, and they were more willing to spend on discretionary items. In most of the country, retailers said shoppers had returned to stores in all channels.
“Today’s data confirmed the suspicion that we are in a recovery that’s strengthened,” said Phillip Swagel, visiting professor at the McDonough School of Business at Georgetown University. “Consumers are acting like they’re confident about the future and beginning to spend again, and inflation is low.”
The economy might continue to feel weak to some people, but this is likely the beginning of an upward trend, he said.
“March results suggest that a strong recovery now unfolds,” said John Lonski, chief economist for Moody’s Investor Services, adding that inflation is well contained.
Retail sales in March beat expectations. Clothing and accessory store sales increased 2.3 percent compared with February, and department store receipts rose 1 percent. In yearly comparisons, specialty store sales advanced 5.7 percent to $18.2 billion and department store volume advanced 2.4 percent to $16.1 billion.
Sales at general merchandise stores, which include department store figures, rose 2.3 percent in March compared with a month earlier and advanced 4.4 percent to $51.5 billion year-over-year. The overall gain in sales of all goods and services was 1.6 percent compared with a month earlier, and rose 7.6 percent year-over-year to $363.2 billion.
On a quarterly basis, retail apparel sales have been strong, said Charles McMillion, president and chief economist for MBG Information Services. The first quarter of 2010 was the best quarter for apparel since fourth quarter 2005, and it was the fourth-best quarter in the last 10 years.
“Price declines were significant, but sales increases were really stunning,” McMillion said.
Retail apparel prices fell a seasonally adjusted 0.4 percent compared with February and dropped 0.4 percent from a year earlier. Women’s apparel prices rose 0.2 percent and advanced 0.5 percent compared with March 2009. Men’s apparel prices were flat, but declined 3.5 percent compared with a year earlier.
The overall CPI was up 0.1 percent in March and advanced 2.3 percent in 12-month comparisons. The so-called core prices, which exclude volatile food and energy prices, were flat versus a month earlier and increased 1.1 percent from March 2009.
Among the apparel categories showing the most dynamic price shifts were dresses, which rose 3.7 percent in monthly comparisons, but declined 0.7 percent year-to-year, and women’s suits and separates, where prices dropped 1.7 percent and fell 0.7 percent in 12-month comparisons. Men’s shirts and sweaters dropped 2.1 percent in March and 7.8 percent from a year ago. Men’s pants and shorts prices increased 0.4 percent but declined 4.2 percent in 12-month comparisons.
Economists pointed out that declining retail prices for apparel meant that retailers’ sales gains are even more impressive, since they were able to post significant increases while selling many items at a discount.
“There is clearly an underlying pick-up in consumer spending that goes far beyond the weather,” said Nigel Gault, chief U.S. economist with IHS Global Insight. “Consumers will need income support to sustain the expansion, but with the labor market beginning to turn upward, help is on the way.”
Despite the gains, economists cautioned that the recovery could sputter if there isn’t a sustained pickup in employment. Preliminary data from the Labor Department this month showed in March employers added the most jobs in three years. Those gains were not enough to erase months of falling employment and a 9.7 percent jobless rate.
While a high level of unemployment doesn’t necessarily rule out growth in consumer spending, continued improvement in employment is “critical,” Moody’s Lonski said. Increases in consumer spending could help spur a growth in jobs.
In addition to the strong readings on retail sales, investors were encouraged by a $3.3 billion first-quarter profit from banking giant J.P. Morgan Chase & Co.
Among the retail gainers on Wednesday were Hot Topic Inc., up 13 percent to $9.58; AnnTaylor Stores Corp., 8.3 percent to $22.94; Saks Inc., 4.3 percent to $9.71, and Macy’s Inc., 3.1 percent to $23.96.
In Paris on Wednesday, trading in shares of Etam Développement was suspended in the early afternoon at a unit price of 30.01 euros, or $40.97 at current exchange. The textile company requested the move in the run-up to the release of a press statement, according to NYSE Euronext. The company is due to report profits for 2009 and sales for the first quarter of 2010 today.
Taking the final spot on the mens’ portion of New York Fashion Week calendar next month will be none other than @tomford. Though he’s shown his men’s wear in New York in the past, this will mark the first time the designer has shown his men’s collection alone during New York Fashion Week: Men’s. His runway show will debut on February 6 at the Park Avenue Armory. #wwdfashion
London-based couture house @ralphandrusso has certainly been in the spotlight, having its dresses worn by @beyonce, Angelina Jolie, Meghan Markle in her engagement photos and more. For couture, Tamara Ralph focused on ornamentation — think: feathers with chain mail, jet embroidery and clusters of pearls and crystals. See the rest of the collection on WWD.com #wwdfashion #couture (📷: @giovanni_giannoni_photo)
Minnie Mouse celebrated her 90th birthday by getting her own star on the Hollywood Walk of Fame. For her celebratory luncheon, @coach’s creative director @stuartvevers dressed her in a custom made prairie dress, complete with Vever’s take on the polka dot – black sequined versions – under a cropped motorcycle jacket. The designer also put his own mark on Minnie’s classic red shoes, infusing the color with sparkles and adding some Coach crystals. “We chose colors that were very Minnie and also represented quintessential Coach elements,” said Vevers. #wwdfashion #nationalpolkadotday (📷: George Chinsee)
@nickjonas is unveiling his first-ever apparel collection through a partnership with John Varvatos. The limited-edition capsule, which makes its debut in spring, also marks the first time the designer has collaborated with anyone on a line. “The process in working with Nick is amazing. It’s inspiring to be around someone who is not only connected with the trade that they do, but also with what’s happening in the environment around him, and how that connects to what we do with style,” said Varvatos. (RG: @johnvarvatos) #wwdfashion
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)