US retail sales rebounded in February and new applications for unemployment benefits hit a fresh three-month low last week, suggesting some strength in the economy after harsh weather abruptly slowed activity in recent months.

The Commerce Department said today retail sales increased 0.3 per cent last month as receipts rose in most categories. That followed a revised 0.6 per cent drop in January and ended two straight months of declines.

“The consumer appears to be back in the game,” said Millan Mulraine, deputy chief economist at TD Securities in New York.

“We see this as further confirmation that the underlying momentum in the economy remains quite favourable, and we look for further upside spending momentum in the coming months.”

Stocks on Wall Street opened modestly higher on the data.

An unusually cold and snowy winter disrupted economic activity at the end of 2013 and the beginning of this year.

Economists had expected a 0.2 per cent increase in retail sales in February after snow and ice blanketed densely populated regions during the first half of the month.

In a separate report, the Labor Department said initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 315,000.

That was the lowest reading since late November. Economists had forecast first-time applications for jobless benefits rising to 330,000 in the week ended March 8th.

The four-week moving average for new claims, considered a better measure of underlying labour market conditions as it irons out week-to-week volatility, fell to its lowest level since early December.

“There is certainly no sign of weakening, adding to the evidence that recent slowing in payrolls is weather-related and temporary,” said Jim O’Sullivan, chief US economist at High Frequency Economics in Valhalla, New York.

Harsh weather has hurt job growth, but the labour market is starting to break out of winter’s grip. Nonfarm payrolls increased 175,000 in February.

Retail sales are expected to accelerate in the spring as warmer temperatures and improving household finances help to unleash pent-up demand.

Rising homes values and stock prices, as well as some uptick in wages, have left household balance sheets in much better shape since the recovery started nearly five years ago.

So-called core sales, which strip out automobiles, gasoline, building materials and food services, and correspond most closely with the consumer spending component of gross domestic product, rose 0.3 per cent in February.

However, core sales in January were revised to show a 0.6 per cent decline instead of only a 0.3 per cent fall. That suggested consumer spending in the first quarter could be somewhat weaker, despite February’s rise in sales.

Consumer spending rose at a 2.6 per cent annual pace in the fourth-quarter of 2013, with the overall economy expanding at a 2.4 per cent rate during that period.

In a second report, the Commerce Department said business inventories rose 0.4 percent in January.

Retail inventories excluding autos, which factor into the calculation of GDP, posted their largest gain since last July. That could see inventories contributing to growth this quarter.

Inventories added only 0.1 percentage point to the fourth-quarter growth.

Retail sales last month were supported by a rise in receipts at automobile and parts dealers. That helped to offset a drop in sales at electronics and appliance stores.

Receipts at building materials and garden equipment stores increased likely as consumers bought snow removal equipment.

Sales at furniture stores rose as did receipts at clothing stores and online retailers. There were also gains in receipts at sporting goods shops and restaurants. Sales at food and beverage stores, however, fell.