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Retail Sales Up 2.7 Percent in August, Most in Three Years

Retailers saw some glimmers of hope in August, as sales rose 2.7 percent from July 2009. The increase represents the largest month-over-month gain in more than three years, however, according to the U.S. Commerce Department, 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 auto sales, restaurants and gas stations are excluded. The organization finds just a 0.7 percent increase compared to 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 may 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 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 compared to July 2009. 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 to 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 to last August, the numbers are even starker. Building material stores were down 12.8 percent, and home furnishing stores were 13.6 percent.

Among the other categories, 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 compared, 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."