Retail sales pick up pace in August on auto purchases

Retail sales strengthened in August to the fastest pace in four months on an acceleration of auto purchases, a positive signal for economic growth through the rest of the year.

Sales rose 0.6 percent last month while July’s 0.3 percent growth was better than initial estimates, a sign that recent jobs growth is boosting consumer spending, the Commerce Department said on Friday. 

{mosads}Total sales are 5 percent above August 2013 and are up 4.5 percent this summer compared with the June-August period last year.

“The rise in consumer confidence, labor markets and retail sales is encouraging, however, not quite strong enough yet for consumers to go on a shopping spree,” said Jack Kleinhenz, chief economist for the National Retail Federation.

“Until income and wages pick up, we shouldn’t expect a sustained surge in consumer spending,” he said.

Consumer spending, which has been held back by stagnant wage growth, is an important to watch because it accounts for 70 percent of economic activity.

Sales were up 1.5 percent at auto dealers, the most since March, following a 0.6 percent increase in July. 

Auto sales are up 9.5 percent from August last year.

All told, 11 of 13 sectors reported sales increases last month, with only gas stations and department stores posting drops. 

Sales were up 1.4 percent at building-material stores, 0.9 percent at sporting goods stores and 0.7 percent at furniture and electronics and appliance dealers.

Meanwhile, the Thomson Reuters/University of Michigan preliminary consumer sentiment index for September rose to 84.6 from 82.5 the month before, the highest in more than a year.

Jobs growth slowed in August to 142,000 after six months of gains above 200,000 a month, while the unemployment rate fell to 6.1 percent, from 6.2 percent.

Retailers shed 8,400 jobs in August after a 21,000 gain in July. 

Wages gains have hovered around 2 percent at an annual pace, about the same pace as inflation.

“The sales figure is a great indicator that consumers are willing and ready to spend as the economy continues to improve,” Kleinhenz said.