US retail sales rebounded sharply in March as Americans received additional pandemic relief checks from the government and increased vaccinations allowed broader economic re-engagement, cementing expectations for robust growth in the first quarter.

Retail sales increased 9.8% last month, the US Commerce Department said today.

Data for February was revised higher to show sales dropping 2.7% instead of 3% as previously reported. Economists polled by Reuters had forecast retail sales increasing 5.9% in March.

Many qualified households have received additional $1,400 checks, which were part of the White House's $1.9 trillion rescue package approved in early March.

The massive fiscal stimulus also extended a government-funded $300 weekly unemployment supplement through September 6.

At the same time, temperatures have warmed up and the public health situation has been rapidly improving, allowing more restaurants to offer dining services.

Excluding cars, fuel, building materials and food services, retail sales rose 6.9% last month after a revised 3.4% decrease in February.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously estimated to have declined 3.5% in February.

Strengthening domestic demand was underscored by the Federal Reserve's Beige Book earlier this week, which described economic activity as having "accelerated to a moderate pace from late February to early April," and also noted that "consumer spending strengthened."

US growth estimates for the first quarter are as high as a 9.8% annualised rate. The economy grew at a 4.3% pace in the fourth quarter.

Growth is expected to top 7% this year, which would be the fastest since 1984. It would follow a 3.5% contraction last year, the worst performance in 74 years.

Though a separate report from the Labor Department today showed first-time applications for unemployment benefits remained elevated last week, that is probably not a true reflection of the job market's health.

Initial claims for state unemployment benefits totaled a seasonally adjusted 576,000 for the week ended April 10 compared to 769,000 in the prior week.

Economists polled by Reuters had forecast 700,000 applications in the latest week.

Part of the elevation in claims is because of fraud. The enhancement of the unemployment benefit programmes, including the weekly subsidy, could also be encouraging some people to file for aid and others to not to seek work.

According to Michael Feroli, chief US economist at JPMorgan, an analysis of the Labor Department's first payments data, which is published monthly and with a considerable lag, suggested aspirational filers are boosting jobless claims.

"Historically, about 45% of initial claims resulted in a first payment of benefits," said Feroli.

"Over the last few months, fewer than 25% of initial claims generated a first payment of benefits. One reason may be that the $300 weekly bonus payments are encouraging more people to give filing a shot, the payoff from a successful claim is significantly greater than before the pandemic," he added.

The Fed's Beige Book also noted that "hiring remained a widespread challenge, particularly for low-wage or hourly workers, restraining job growth in some cases."

While claims have dropped from a record 6.149 million in early April 2020, they are well above their pre-pandemic level. In a healthy labour market, claims are normally in a 200,000 to 250,000 range.

The government reported this month that employers hired 916,000 workers in March, the highest amount in seven months.

But employment still remains 8.4 million jobs below its peak in February 2020.