AUGUST RETAIL SALES DISPLAY STABLE GROWTH RATE

Byline: Jennifer Owens

WASHINGTON — Government statistics released Friday on August retail sales had a happy ring. They appeared solid enough to satisfy retailers, and yet weren’t so hefty that they ignited fears of inflation.
The figures showed overall sales rising for the third month in a row, not at the pace earlier predicted by analysts, but nevertheless at a rate that is expected to continue into next year at least.
According to seasonally adjusted figures from the Commerce Department, August retail sales grew 0.4 percent from July, rising 5.3 percent over a year ago.
Apparel and accessories retailers and general merchandisers saw slightly stronger results in August as they posted their fourth consecutive month of growth.
Sales at apparel and accessory stores rose 0.6 percent in August over the previous month, which itself was a 0.8 percent improvement over June. August sales were 4.7 percent higher than a year ago.
Likewise, sales at general merchandise stores — including department stores, variety stores and discounters — also climbed 0.6 percent over July’s receipts and 6.9 percent over a year ago. Department store sales excluding leased departments rose 0.7 percent in August against a month ago and 8.1 percent over a year ago.
Meanwhile, new revisions ratcheted up July’s figures in most apparel-related categories, with apparel and accessory stores gaining the biggest boost. According to the new July figures, apparel and accessory store sales rose 0.8 percent from June, compared with the previously reported 0.2 percent gain. They also registered a revised 4.5 percent gain against a year ago, as opposed to the previously reported 3.1 percent.
For August, many Wall Street analysts had expected the month’s overall sales figures to register as high as 0.8 percent, based on individual retailer reports.
Financial markets were relieved, however, by the slower growth, said Maureen Allyn, chief economist for Scudder, Stevens & Clark in New York. “The Street was worried that the Federal Reserve would raise interest rates” if August’s sales were too strong, she said. Instead, said Allyn, “they took this as a sign of reasonable, moderate growth.”
Building upon July’s 0.9 percent rise in overall retail sales, August’s position looked good for store owners and investors, Allyn said. “The financial markets can live with moderate growth that would make retailers happy. But what they can’t support is a boom,” she said.
Rosalind Wells, chief economist for the National Retail Federation, also gave August the thumbs up.
“It’s all positive,” she said. “Every sector seems to have done well. All are up strong, as they have been in the last couple of months.”
Wells said consumers showed a willingness in August to buy back-to-school clothes. “Back to school was strong, and early fall fashion seems to have done well,” she said.
The momentum should continue: “I think we can look forward to a nice, steady pace through the end of the year,” she said. “We’re now looking at retail sales that are increasing 4 and 5 percent over a year ago, and that’s with no inflation. I think it’s going to be 6 percent for Christmas.”
The current sales growth is reflecting the nation’s ongoing economic health, Wells said, adding, “We’re in very good territory.”
Ken Goldstein, an economist with the Conference Board in New York, agreed, saying that despite repeated warnings that consumers will eventually run out of money and enthusiasm, no one should be surprised by August’s figures.
“It hasn’t happened,” he said. “They’re not going to go out spending like drunken sailors, but neither are they going to fold up their tents and go home.”
With consumer confidence remaining high and unemployment staying low, little has changed to concern shoppers, Goldstein said, even if they’re not interested in buying sprees. “If there’s any complaint, it’s that consumer income is rising too slow, not too fast,” he said. “But they’ve been spending for four years now, so they don’t need a lot. The real story is that they’ll continue to buy.”
Goldstein said one reason for continued spending is that as stock and bond markets remain strong and home prices rise, consumers’ balance sheets are looking better and better.
And that combination should keep retail’s moderate sales growth continuing through next year.
“And if it’s going to slow, we won’t see a drop-off before late 1998,” he said.

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