Retail sales in August posted their best month in four and the positive revision to July's data added to the potential for U.S. economic growth in the current quarter.
The 0.6 percent rise in overall retail sales, though uncorrected for price changes was a strong rebound from the 0.3 percent gain the prior month initially reported as flat, according to the Commerce Department in Washington. The August result matched the forecast of economists in the Bloomberg survey.
Retails sales without automobiles rose 0.3 percent as predicted and the 'control' group' of purchases, the category mimicking the consumption component in the GDP calculation increased 0.4 percent, just under the 0.5 percent prediction. July's score of the ' control group' was revised to 0.4 percent from 0.1 percent also raising GDP potential for the third quarter.
Reasons for improving sales are not hard to find. The economy has averaged 215,000 new jobs per month this year. While last month's 142,000 posts was a disappointment, 230,000 had been expected, there is a good chance the total will be revised higher when the September figures are released on October 3rd. The stock market has been flirting with all-time highs in the Dow, the S&P and NASDAQ and, perhaps of more import for most families gasoline prices have fallen 8 percent. The national average price for regular was $3.41 yesterday down from a high of $3.68 in June and $3.69 in April. Fuel prices have not been this low since February.
Still all was not copasetic with the consumption numbers. The majority of the overall retail increase was driven by a 1.5 percent rise in automobiles, a large portion of which are funded by sub-prime car loans. Retail sales excluding automobiles gained 0.3 percent as forecast but it was at its lowest since January.
Chief Market Strategist
WorldWideMarkets Online Trading