April retail sales firm outside auto sector

By Glenn Somerville

WASHINGTON (Reuters) - U.S. retail sales excluding cars were surprisingly strong in April, showing consumers still willing to add spending punch to the economy despite soaring food and energy prices, a government report showed on Tuesday.

The report echoed recent data implying underlying economic durability, including fewer job losses in April than feared and a surprisingly strong pace of first-quarter productivity that buoys hope for corporate profits.

The Commerce Department said retail sales declined 0.2 percent, but excluding cars, sales rose 0.5 percent. Economists expected total sales to slip 0.1 percent, but had forecast a gain of just 0.2 percent outside of autos.

"I think it's a report that tells you the economy is very weak, but if we are in a recession, it's going to be a real short one," said Robert MacIntosh, chief economist at Eaton Vance Corp in Boston.

Analysts hope consumer spending will cushion an economic slowdown and offset the dampening impact of falling housing prices, particularly with an added boost coming from government rebate checks being sent to about 130 million taxpayers under a stimulus plan.

The economy is forecast to grow at a scant 0.2 percent annual rate in the second quarter, slowing from the anemic 0.6 percent growth rate in the previous two quarters, according to a survey of economists released by the Philadelphia Federal Reserve Bank on Tuesday.

Many economists believe a recession is all but certain, although the recent string of stronger-than-expected data has strengthened the hands of those who argue otherwise.

"Most of the signs that we are seeing are toward a stronger economy rather than a weaker economy, at least as ... compared to a few months ago," White House economic adviser Edward Lazear told Reuters.   Continued...