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Retail sales up 2.7 percent in August

Department stores and grocery stores posted gains, but long-term outlook remains unclear

September 15, 2009

Retailers saw some glimmer of hope in August, as sales increased 2.7 percent from July, representing the largest month-over-month gain in more than three years.

According to the U.S. Commerce Department, however, these numbers are still 5.3 percent below the same month last year.
 
According to the National Retail Federation, the numbers are not quite as rosy when sales at automobile companies, restaurants and gas stations are excluded. The organization finds just a 0.7 percent increase compared with the month before, and a decrease of 4.3 percent year-over-year. Much of the gains in August came from the "Cash for Clunkers" program, and while this boosted numbers in the short term, it might weigh down sales numbers in the future.
 
"Many Americans who traded in their vehicles have become saddled with monthly car payments, which reduces the amount of money they're able to spend in other areas," said Rosalind Wells, chief economist for the NRF, in a statement. "As a result, it remains to be seen how the 'Cash for Clunkers' program will impact traditional retail sales."
 
Per the U.S. Commerce Department, most business categories saw an uptick in performance in August compared with July. General merchandise stores moved up 1.6 percent, and department stores specifically rose 2.4 percent (though department stores were down 4.7 percent year over year). Food and beverage stores showed modest gains of 0.5 percent. Grocery stores specifically increased 0.3 percent, but were down 1.4 percent compared with August 2008.
 
The only categories to post a month-over-month loss were building material and garden equipment supply stores (down 1.2 percent) and furniture and home furnishing businesses (down 1.6 percent), indicating that consumers are still holding off on major home improvement projects and furniture purchases. Compared with last August, the numbers are even starker. Building material stores were down 12.8 percent, and home furnishing stores were down 13.6 percent.
 
Among the other categories, sales at electronics and appliance stores were up 1.1 percent, food services and drinking places were up 0.3 percent, and health and personal-care stores saw a rise of 0.4 percent. The latter two categories were the only ones to post year-over-year gains, with health and personal-care businesses up 2.9 percent and food services and drinking places up 0.7 percent.

"Shoppers were a bit more comfortable digging into their wallets last month, and retailers are hopeful that we've turned a corner," said Wells. "It is encouraging to see some momentum building as retailers anticipate the all-important holiday season."
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