Shoppers loosened their purse strings in August more than they did in July, giving retail sales their largest boost since January 2006.
The Commerce Department reports that monthly sales increased by an adjusted 2.7 percent. Experts had predicted sales would improve during August, but they expected a gain of just 2 percent, according to news reports.
"This is a sign consumers are beginning to feel a little more comfortable about the economy," Commerce Under Secretary Rebecca Blank tells reporters. However, she adds that consumers still have some hesitations.
Sales had fallen 0.2 percent from June to July. And although August retail sales were down 5.3 percent compared to August 2008, this was the smallest year-over-year drop since October, Bloomberg reports.
The sales-tax holidays that took place in several states throughout the country likely helped boost purchases, note the National Retail Federation.
"Shoppers were a bit more comfortable digging into their wallets last month and retailers are hopeful that we've turned a corner," notes Rosalind Wells, the NRF's chief economist. "It is encouraging to see some momentum building as retailers anticipate the all-important holiday season."
Car sales increased by more than 10 percent with help from the cash-for-clunkers program, which gave buyers $4,500 toward the purchase of a new care if their trade-in qualified—and gave car sales their largest boost since October 2001. Clothing and accessory sales increased by 2.4 percent compared to July; however, sales were down 5.9 percent compared to August 2008. Shops that specialize in leisure-time activities, such as sports, had a 2.3 percent increase in sales compared to July.
While spending accounts for 70 percent of economic activity in the U.S., experts warn that August's encouraging numbers don't necessarily equal a trend.
"All the reasons for concern about consumer spending are still out there," according to Louis Crandall, chief economist at Wrightson ICAP LLC. "If there is any sign of resilience in September, that will be very encouraging."
"We continue to believe that the consumer will trail rather than lead the recovery, and we will only be confident about the consumer when we see job growth and labor income gains," adds Stephen Stanley, chief economist for RSB Securities.
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Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.