An hour before the commencement of trading today, the Commerce Department released its latest report on retail sales for the month of April. That report, which was expected to be closely watched as a gauge to how the all-important consumer sector is faring, was encouraging. Specifically, the Commerce Department reported that retail sales rose 0.1% last month, to $419.0 billion. Total sales for the February-through-April 2013 period were up 3.7% from the same period a year ago.

The 0.1% month-to-month advance was notably better than the consensus expectation of 0.4% decrease. The positive showing (up 3.6% year over year) was yet another indication that the U.S. economy is still expanding, even if the growth is not as formidable as it should be at this stage of the economic up cycle. This report, along with favorable data recently on jobs creation, housing, and consumer confidence are more signs that the U.S. economy will grow at a much more formidable pace in 2013 than the 0.4% advance in the final quarter of 2012. More importantly, the latest data are an indication that the recently enacted payroll tax hikes are not having, at least initially, as severe an impact on consumer spending as many pundits feared. Americans kept spending last month despite the higher Social Security taxes that took effect at the start of this year.

Meantime, a closer look also unveiled some positive aspects in addition to the surprising headline number of 0.1% growth. Core retail sales, which exclude gas, autos and building supply store sales, rose 0.5% sequentially in April after climbing 0.1% in the prior month. Auto sales rose 1.0% after falling 0.6% in March. And even when excluding gasoline purchases, which accounted for nearly half of the total, retail sales rose a solid 0.6%. Receipts at clothing outlets rose 1.2%, the biggest increase since February, 2012. Sales at sporting goods, hobby, book, and music stores gained 0.5%, while receipts at electronics and appliances stores advanced 0.8%. This is important, as the consumer accounts for slightly more than two-thirds of the nation’s economic output.

All in all, the latest retail sales report made for an encouraging read on the state of the U.S. economy. Looking forward, the continued well being of the U.S. consumer will be vital for the domestic economy, as the ongoing financial and economic problems in the euro zone and recent lackluster economic data from Asia may result in lower overseas demand for American goods in the coming months. 

At the time of this article’s writing, the author did not own any of the stocks mentioned.