September 15, 2010 in Business

Incentives help drive retail sales in August

Martin Crutsinger Associated Press
 

WASHINGTON – Retail sales rose in August by the largest amount in five months, adding to evidence that a late spring economic swoon was temporary and not the start of another recession.

Retail sales increased 0.4 percent last month, the Commerce Department said Tuesday. It was the second straight monthly increase and the biggest gain since March.

Excluding a decline in autos, retail sales increased 0.6 percent. That followed two relatively flat months and a sharp drop in May.

The strength in August retail sales came in a number of areas from department stores to clothing stores and sporting goods outlets. However, bigger-ticket items such as furniture and electronics fell last month.

With the sales rebound in July and August, economists expect 2 percent growth in the second half of this year. That would be better than the 1.6 percent growth rate in the April-to-June quarter. But it would be well below the January-to-March quarter’s 3.7 percent growth rate and not enough to lower the unemployment rate.

Part of the boost in August reflected tax-free shopping days offered as an incentive by several states.

“The incentive-driven gain in retail sales in August is unlikely to be repeated in September,” said Sal Guatieri, an economist at BMO Capital Markets. “Real consumer spending will likely continue to grow at a subdued rate … until job growth improves.”

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