US retail sales showed unexpected strength in March as Americans shrugged off high petrol prices and bought a range of goods.
The data suggested that US first quarter economic growth was probably not as weak as many had feared.
Retail sales increased 0.8%, the Commerce Department said, after rising 1% in February.
Last month's gains surpassed economists' expectations for only a 0.3% rise.
They could prompt analysts to raise their forecasts for first-quarter consumer spending, the main driver of the economy. The economy grew at an annual rate of 3% in the fourth quarter and growth in the January to March period was seen at around 2.5%.
However, the growing optimism over the economy was tempered by a separate report showing that manufacturing in New York state slowed sharply this month as shipments of goods weakened. Factories, however, hired more workers and received higher prices for their goods, giving the report a mixed tone.
The New York Federal Reserve Bank said on Monday its "Empire State" manufacturing activity index fell in April to 6.56, the lowest reading in five months, from 20.21 in March.
Another report also showed confidence among homebuilders slipped in April for the first time in seven months amid expectations of a slower sales pace in the next six months.
The rise in retail sales last month was broad-based, even though Americans paid 27 cents more per gallon of petrol than they did the previous month. So far, Americans appear to be taking rising petrol prices in stride, thanks to a mild winter that has cut heating bills.
Motor vehicle sales rose 0.9% after increasing 1.3% in February. Car sales have accelerated in recent months, boosted by pent-up demand by households. A devastating earthquake and tsunami in Japan caused disruptions to car production last year and left dealers without models that consumers wanted to buy.
Excluding cars, retail sales climbed 0.8% last month after advancing 0.9% in February.
Elsewhere, petrol sales receipts increased 1.1% after rising 3.6% in February. The rise in petrol sales reflected high prices at the pump. Excluding cars and petrol, sales advanced 0.7% in March, adding to the prior month's 0.5% gain.
Details of the report showed some strength, suggesting consumer spending will continue to support growth. Last month, clothing store receipts rose 0.9%, while sales at building materials and garden equipment suppliers jumped 3% - the largest gain since December.
Unseasonably mild weather has helped to boost sales at clothing retailers as well as purchases of building materials and garden equipment.
So-called core retail sales, which exclude cars, petrol and building materials, rose 0.5% after increasing by the same margin in February. Core sales correspond most closely with the consumer spending component of the government's gross domestic product report.
Sales at restaurants and bars edged up 0.3%, while receipts at sporting goods, hobby, book and music stores rose 0.5%. Sales of electronics and appliances increased 1%, the largest gain since October, while receipts at furniture stores climbed 1.1%.
A second report from the Commerce Department showed business inventories increased 0.6% to a record $1.58 trillion as car dealers restocked to meet increased demand for motor vehicles from consumers.
Business sales increased 0.7% to a record $1.24 trillion in February, after advancing 0.4% in February.