Data Likely to Show Stronger Economy

Retail sales rebounded in March and factories churned out more cars and computers as the U.S. economy chugged into the second quarter, economists said in advance of government reports this week.

March sales at auto dealers and other retailers probably rose 0.5%, after a 1.4% drop in February, the Commerce Department is expected to report Thursday, according to the median estimate of economists in a Bloomberg News survey. A report from the Federal Reserve a day later may show industrial production rose 0.5% last month.

“We are seeing good income growth and consistently good job growth, so the consumer remains in relatively solid shape,� said Gerald Zukowski, deputy chief economist at Nomura Securities International Inc. “The economy is currently experiencing a nice, steady, solid momentum, the kind that can continue for an extended period.�

Part of the increase in retail sales last month reflected an increase in sales at service stations as gasoline prices rose, economists said.

High prices at the pump combined with cold weather and no Easter in March to contribute to disappointing sales at some chain stores last month.

Easter, which is often marked by higher sales of clothes and sweets, is on April 16, its latest occurrence in three years.

The government’s numbers probably won’t reflect the soft store figures, economists said. The Census Bureau, the Commerce Department agency that gathers retail sales data, tries to adjust the figures for seasonal factors such as holidays to provide more accurate readings on the economy.

Excluding auto dealerships, retail sales also rose 0.5% last month after a 0.6% decline in February, economists expect.

Factories are working harder to stay ahead of demand. The expected gain in industrial production for March would be the fourth increase in five months and would come after a 0.7% rise in February. Economists forecast the Fed’s report Friday will show the amount of capacity being used probably rose to 81.4% last month, the most in more than five years.

Economists project a Commerce Department report Wednesday will show that increased demand overseas boosted exports, leading to improvement in the U.S. trade deficit in February. The gap probably narrowed to $67.5 billion from a record $68.5 billion in January, they estimate. Even with the improvement, it would still be the second-biggest deficit ever.

From Bloomberg News

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The Week Ahead

Today

* Alcoa Inc. releases first-quarter earnings.

Tuesday

* Genentech Inc. and Levi Strauss & Co. release first-quarter earnings.

Wednesday

* The Commerce Department reports on international trade for February.

* The University of Michigan issues its preliminary report on consumer confidence for April.

* The Treasury Department reports on the federal budget for March.

* Quarterly earnings reports are expected from Circuit City Stores Inc., Advanced Micro Devices Inc. and Gannett Co.

Thursday

* The Labor Department reports on weekly jobless claims.

* The Commerce Department reports on retail sales for March and business inventories for February.

* Tribune Co., New York Times Co., McClatchy Co. and General Electric Co. release first-quarter earnings.

Friday

* Good Friday. Many financial markets around the world, including U.S. stock and bond markets, are closed.

* Knight Ridder Inc. releases first-quarter earnings.