AP News

Ahead of the Bell: US Retail Sales


WASHINGTON (AP) — U.S. retail sales likely rose in August for the second straight month, an encouraging sign that consumers are willing to spend even as unemployment remains high.

Economists forecast that retail sales rose 0.8 percent last month, according to a survey by FactSet. That would match July's increase, the biggest increase in five months.

The Commerce Department will release the report at 8:30 a.m. Eastern Friday.

The retail sales report is the government's first look each month at consumer spending, which drives roughly 70 percent of economic activity. Consumer spending has increased at a slow pace this year, dragging on the economy.

Higher gas prices likely contributed to the increase. Gas prices averaged $3.87 a gallon nationwide, 17 cents higher than a month ago.

Another reason for the expected gain: Automakers earlier this month reported the best sales in three years, after seeing rising demand for pickup trucks.

An increase in retail spending could spur faster growth and help boost sluggish hiring. Employers added only 96,000 jobs last month, below the 141,000 added in July and far below the average gains of 226,000 in the first three months of the year.

The unemployment rate fell to 8.1 percent from 8.3 percent, but only because the number of people in the work force shrank.

For now, the economy isn't growing fast enough to spur greater job gains. The economy expanded at a 1.7 percent annual pace in the April-June quarter. That's down from 2 percent in the first quarter and 4.1 percent in the final three months of last year.

On Thursday, the Federal Reserve said it would purchase $40 billion of mortgage-backed securities a month until the economy and job market show signs of steady improvement. Fed officials also said they would keep short-term interest rates low, even after the acceleration of any economic recovery.

Early reports from the nation's largest retail chains suggest that things picked up in August, driven partly by back-to-school purchases. Sales at 18 retail chains rose last month by the most since March.

Sales at Target rose 4.2 percent and increased 5.1 percent at Macy's. Gap Inc. posted a 9 percent jump in sales.


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