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US Retail Sales Increased in August Due to High Consumer Sentiment Index

Retail sales in US rose 0.6% in August. It was the highest in last four months. The surge, combined with previous readings is regarded as an indicator of growth in this quarter.

Economists from the Wall Street Journal have earlier predicted 0.7% increase in retail sales in August. If auto sales are excluded, the surge was 0.5% in August. Total retail sales in August increased 5% from the previous year.

What are the factors behind increased amount of shopping by US consumers? An increase in recruitment drive, gain in the stock market and lower price of gas are some the factors. An economist called Gus Faucher said “the consumer is in decent shape right now.”

For automobile manufacturers and dealers, August proved to be a conducive month. Sales went up 1.5%, the best since March. Sales percentage rose 0.6% from the previous month. Figures indicate a huge number of Americans are purchasing automobiles. More than 17 million cars and light trucks were sold in August, which was highest since January 2006 when 16.4 million vehicles were sold. Data on automobile sales were collected from Ward’s Automotive Group.

The real estate industry seems to be recovering because the sale of building materials increased 1.4%, the highest since April. Sales of furnishing and appliance store products has seen an increase of 0.7%.

The Consumer Sentiment Index (CSI) of the University of Michigan was 81.8 in July. In August it rose to 82.5. The University of Michigan has attributed the increase to enthusiasm about jobs, better income and the higher income groups accruing increasing wealth.

But the optimism about employment has failed to realize. For last few months, the pace of recruitment drive was monumental. In August however, it slumped. The same month, 142000 jobs were added by the employers. This is below one year average of 212000 jobs. The unemployment rate indeed slipped to 6.1% from 6.2%, but that’s chiefly because people who were already unemployed, stopped searching job opportunities.

All in all, the data don’t indicate a very promising time ahead. However, renewed sentiment by customers is undoubtedly a positive sign.

Sources

http://www.bloomberg.com/news/2014-09-12/retail-sales-in-u-s-increased-in-august-by-most-in-four-months.html
http://online.wsj.com/articles/u-s-retail-sales-rise-0-6-in-august-1410525105
http://abcnews.go.com/Business/wireStory/us-retail-sales-rise-august-auto-sales-25454357

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