U.S. retail sales climbed in March above expectations and demand for the prior month was revised much higher.

A separate report showed manufacturing activity in the New York region ticked higher in April.

Retail sales increased 0.7% last month, after rising 0.5% in February, the U.S. Commerce Department said today. Originally, February sales were seen up 0.1%.

The 0.7% increase in overall retail sales during March was a surprise on Wall Street. Economists had forecast a 0.5% increase. The climb in March was the largest since 1.1% in December 2006.

Automobile and parts sales rose 0.4% in March. February sales increased 0.9%.

Sales of all retailers except auto and parts dealers climbed 0.8% in March. Economists expected an 0.8% climb.

Meanwhile, manufacturing activity in the New York Federal Reserve district stabilized in April with the overall index edging up to a reading of 3.80 from an unrevised 1.85 in March.

The median expectation economists surveyed by Dow was for a reading of 10.00.

The April reading for the new orders index edged up to a reading of 3.94 compared to 3.14 in March, while the shipments index decreased to 8.66 from 18.54. The unfilled orders index stayed in negative territory with a reading of -8.33 compared to a negative reading of -8.54 in March.

The prices paid index increased to a reading of 40.48 compared to 30.23 in March, but the prices received index slipped to a reading of 7.14 from 10.47 in March, showing that manufacturers are still facing higher costs which they are having trouble fully passing on in the form of higher prices. The number of employees slipped, while the average employee workweek also declined.

The index is widely seen as a precursor of the Philadelphia Fed’s manufacturing index and a national reading from the Institute for Supply Management.