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US retail sales rebound in August

H.S. Borji
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US retail sales rebound in August

US retail sales rose in August at the fastest rate in four months, adding further evidence the US economy was expanding robustly in the third quarter.

Retail sales advanced 0.6 percent in August to $444.4 billion, following an upwardly revised gain of 0.3 percent the previous month, the Commerce Department reported today in Washington. The August reading aligned the consensus view, according to a median estimate of economists compiled by Bloomberg News.

Compared to August 2013, retail sales were up 5 percent.

Excluding automobiles, retail revenues were up 0.3 percent in August, following an identical increase the previous month.

Retail sales advanced across the board, with 11 of the 13 major sub-categories reporting growth, led by motor vehicle and parts dealers and building material stores.

Motor vehicle dealers saw revenues rise 1.5 percent from July and 9.5 percent from year ago levels, a sign Americans continued to spend on automobiles. Cars and light truck sales advanced 6.7 percent in August to reach 17.5 million, the highest level since January 2006, according to Ward’s Automotive Group.

Meanwhile, building material and garden equipment retailers saw revenues rise 1.4 percent, which translated into an annual gain of 6.7 percent.

Elsewhere, sales at miscellaneous store retailers edged up 2.5 percent from July, translating into an annual gain of 3.4 percent.

Sales at electronics and appliance stores rose 0.7 percent and were up 1.7 percent compared to year-ago levels.

Food service revenues increased 0.6 percent. Year-on-year, this amounted to a 7.1 percent increase, official data showed.

The monthly retail sales report is one of the most closely scrutinized readings on the economic calendar because it provides insights into consumer spending and overall confidence. Consumer spending accounts for two-thirds of the US economy and is considered a key driver of economic growth.

Heightened consumer spending is partly attributed to a stronger labour market. With joblessness at multi-year lows and employers adding and retaining employees at a steady rate, consumers are more willing to open up their wallets.

US employers added 142,000 nonfarm payrolls in August, snapping a six-month streak of 200,000-plus job gains. On Thursday the Labor Department said initial jobless claims for the week ended September 6 rose 11,000 to 315,000. Continuing claims edged up 2.487 million from 2.478 million in the week ended August 30. However, the weekly data continued to support expectations for overall tightening in the labour market.

A separate report released on Thursday suggested consumer spending grew broadly in the second quarter, a sign the economy was back on track after the first quarter slowdown.

Services sector revenues increased across the board in the second quarter, according to the Census Bureau’s Quarterly Services Survey.

Healthcare spending increased 3 percent to $565.6 billion following an unexpected decline in the previous three month period.

Revenues in the information sector rose 0.8 percent in the second quarter. The professional, scientific, and technical services industry posted an increase of 1.4 percent in the April to June period. Spending on administrative and support and related services edged up 1.9 percent, official data showed.

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