Retail sales rose 0.4 percent last month, the highest month-to-month gain in five months, the Commerce Department said. The results will likely sooth concerns from economists and investors that the U.S. economy may be headed towards a double-dip recession.
Excluding auto sales, which has slumped all summer, retail sales were up a robust 0.6 percent, higher than expected by economists polled by Thomson-Reuters.
The back-to-school shopping season was a major factor in the sales gain. Sales of clothing and apparel increased 1.2 percent last month, and overall sales at department stores rose 0.4 percent. The Commerce Department said that purchases at food and grocery stores increased by 1.3 percent.
Big-ticket purchases saw slight declines, as sales of furniture fell 0.5 percent, and sales of electronics and appliances dropped 1.1 percent.
“Although some of the surprise in today's report is dampened by weakness in the motor vehicles component, the strength in core retail sales is an encouraging signal for Q3 consumption,” wrote Barclays Capital analyst Theresa Chen in a research note.
A separate government report showed that business inventories jumped in July, a sign that businesses are ramping up purchasing in preparation for increased consumer consumption in the third quarter and the upcoming holiday shopping season.
“It takes out some of the fears we had about a month ago about the economy may be slipping into recession. If the labor market picks up, it’s sustainable,” noted JPMorgan Chase chief U.S. economist Michael Feroli in a Bloomberg interview.
