'Clunkers' Plan Drives U.S. Retail Sales up 2.7%

August auto sales soared 10.6% as compared to July

Official data released on Sept. 15 showed that the "Cash for Clunkers" program powered US retail sales 2.7% higher in August. However, analysts said the outlook remains muted with the government stimulus ended.

The August spike was the steepest since January 2006 and was far stronger than the 1.9% rise expected by most analysts.

The jump followed a revised 0.2% decline in July, the Commerce Department said.

Robust auto sales led the gains, soaring 10.6% jump from July, the biggest rise since October 2001, as car owners swapped old vehicles for new, more fuel-efficient models to take advantage of the government's wildly popular "Cash for Clunkers" rebate program that ended in late August.

Spending was broad-based in August, with sales declines posted only in building materials and garden supplies, and furniture and home furnishings.

For a sustainable recovery, the private sector must take over from government stimulus efforts, said Joel Naroff of Naroff Economic Advisors, and the report "provides the first bit of evidence that may indeed be happening. "This was a stronger than expected report because the jump in spending came not just from government-hyped motor vehicle sales but also from people buying lots of other goods."

On an annual basis, sales remained 5.3% below the August 2008 level as Americans hunkered down amid a 26-year high in unemployment in the painful recession that began in December 2007.

Excluding auto sales, retail sales rose 1.1% in August from July, stronger than the average consensus forecast of 0.4%.

Stripping out auto and gasoline sales, so-called "core" retail sales rebounded in August, rising 0.6% after falling 0.4% in July.

The monthly retail sales data signal the direction of consumer spending, which accounts for roughly two-thirds of output in the world's largest economy and is considered a key element in a sustainable recovery.

Copyright Agence France-Presse, 2009

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish