U.S. retail sales came in much stronger than expected in April, jumping 1.2% from March. Strong car sales, gas sales and department store receipts led the way.

“The gain was both stronger than expected and broadly based,” notes Bank of Montreal. It says that sales of motor vehicles and parts rose 1.9%, and there were solid gains in spending on building and gardening equipment, health and personal care, clothing, and general merchandise.

“The ongoing strength in personal consumption is encouraging given the persistent weakness in labour markets,” says BMO. “Spending appears to be held up by strong gains in labour productivity and the attendant positive implications for incomes. And, of course, low interest rates continue to bolster growth in personal credit and spending.”

RBC Financial Group economists says that the numbers should help to ease some of the recent skepticism about the U.S. economy’s ability to repeat anything close to the first quarter’s 5.8% growth spurt. But they note that “A good second half outlook depends on whether other sectors of the economy, like business spending, will begin to grow again.”

BMO Nesbitt Burns concludes, “It is wise to not get too caught up in one month’s retail sales results since the data are volatile. However, these figures show more than one month’s sales strength, and are bearish for interest rates. Equity markets might view the data as hopeful for top-line revenue growth.”

BMO says that the report is also consistent with its view that the Fed will begin tightening in August, “once policymakers are confident in the durability of the recovery”.