Total retail sales rose 0.4 percent following an upwardly revised 2.1 percent surge in March, the Commerce Department said on Friday. Sales in March were previously reported to have increased 1.9 percent.

Retail sales have now increased for seven straight months and in April were lifted by a surprise gain in motor vehicle receipts.

Analysts polled by Reuters had forecast retail sales rising 0.2 percent last month. Compared to April last year, sales were 8.8 percent higher.

"This adds to a string of data we have received indicating that consumer spending is improving," said James Cox, managing partner at Harris Financial Group in Colonial Heights, Virginia.

Motor vehicle and parts purchases unexpectedly rose 0.5 percent after increasing 6.7 percent in March. Analysts had expected the government's dollar measure of auto sales to fall in April, after automakers reported a decline in unit sales.

Excluding autos, sales rose 0.4 percent last month after rising 1.2 percent in March. April's rise was in line with market expectations.

Households are now participating in the economy's recovery, encouraged by an improving labor market. Economic growth resumed in the second half of 2009 following the worst recession since the Great Depression and continued into the first quarter of this year.

Core retail sales, which exclude autos, gasoline and building materials, fell 0.2 percent after increasing 0.7 percent in March. Core sales correspond most closely with the consumer spending component of the government's gross domestic product report.

Clothing and clothing accessories sales fell 1.0 percent, after surging the prior month because of an early Easter holiday and warm weather.

Sales at electronics and appliance stores slipped 0.4 percent, defying market expectations for a rise. Receipts at sporting goods, hobby and book stores fell 1.9 percent in April.

Building materials and garden equipment receipts, however, climbed 6.9 percent, while receipts at gasoline stations rose 0.5 percent.

Meanwhile, industrial production logged a stronger-than-expected gain in April, more evidence that manufacturing is playing a lead role in powering the US economic recovery.

The 0.8 percent increase in output at the nation's factories, mines and utilities reported by the Federal Reserve on Friday marked an improvement from the 0.2 percent rise registered in March. It was the best showing since a 1.2 percent jump in January. The performance of the industrial sector in April was even stronger than the 0.6 percent gain that economists were predicting.

Factories - the single biggest slice of industrial activity - ratcheted up production by a brisk 1 percent for the second straight month, the Fed reported.

Manufacturers are boosting production because companies are starting to restock depleted inventories. Both consumers and businesses are showing a greater appetite to spend now that the economy is healing. During the recession, companies slashed inventories at a record pace as Americans and foreign customers pulled back.

A wide swath of manufacturers reported increasing production in April.

Those boosting production included makers of primary metals, fabricated metal products, machinery, electrical equipment, appliances, furniture and carpeting, plastics and rubber products, petroleum and coal products, chemicals and paper products. Production of business equipment also posted gains. However, production of autos and parts declined in April. So did aerospace products, other transportation equipment and home electronics.

"We're starting the second quarter on a very positive note. The manufacturing recovery is getting more diffuse with 17 of 19 major sectors increasing production," said David Huether, chief economist at the National Association of Manufacturers. "It looks more durable and deeper." Stronger manufacturing activity has prompted factories to step up hiring.

Manufacturers added 44,000 jobs in April, the most since 1998, the government reported last week. Businesses that produce fabricated metal products, machinery, electrical equipment and appliances, plastics, food, and paper products all posted job gains.

All told, employers added 290,000 jobs last month, the most in four years.

More companies - including Ford, Caterpillar and Whirlpool - are seeing profits grow. General Electric says the "clouds are breaking" after having suffered one of its worst years in 2009.

Friday's report also showed that production at mines rose 1.4 percent for the second month in a row. Output at gas and electric utilities dropped by 1.3 percent in April as warmer spring weather lessened demand.

Overall, the improved industrial activity is lifting the operating rate at factories, mines and utilities, the Fed said industrial companies' operating rate rose to 73.7 percent in April, matching economists' predictions. That was up from 73.1 percent in March and was the highest reading since late 2008.