US sales increased in August, the fastest since April, boosting the prospects for economic growth in this quarter.
USA Today reported that retail sales were up 0.6 in August. Excluding auto purchases, the sales increased 0.3%. The sales at electronics, clothing and furniture stores increased while sales for department stored dropped.
Americans are spending more on SUVs and cars as auto sales reached 17.5 million, an eight year high last month as indicated last week by an Autodata report.
Toyota Motor Corp’s US sales chief, Bill Fay said, “We’re going to close out the year with the highest production plan we’ve had in seven years. Consumer confidence is up, spending growth is out there in the marketplace, interest rates are stable, fuel prices are stable. It’s pretty darn close to ideal.”
After dropping earlier this year due to harsh winter weather, spring retail sales improved but did not meet the expectations of economists and remained unchanged in July 2014.
Economists were expecting high household wealth, from the rising home prices and stock market rally and lower debt to drive increased spending this year. The annual wage increase has, however, been stuck at 2% in most of the recovery. Analysts say that faster pay increases are required to influence a significant increase in spending.
Capital Economics senior US economist, Paul Dales said, “With further job gains, rises in income growth and a loosening in credit conditions in the pipeline, consumption growth should strengthen in the fourth quarter and into next year too.”
Bloomberg quotes PNC Financial Services Group Inc economist, Gus Faucher as having said, “The consumer is in decent shape right now. We are looking at solid economic growth in the third quarter.”
After the report, stock index futures held losses. The contract on S&P 500 index, maturing December, dropped 0.1% to 1,987.1.
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