Sales at U.S. retailers rose at their fastest pace in three-and-half years in August as government-sponsored auto incentives buoyed demand for motor vehicles, according to data on Tuesday that also showed strong sales outside the auto sector.
The Commerce Department said total retail sales climbed 2.7 percent, the biggest monthly advance since January 2006, after declining by a revised 0.2 percent in July. Sales in July were previously reported to have eased 0.1 percent.
Analysts polled by Reuters had forecast retail sales rising 2.0 percent in August. Sales in August were a bolstered by the government's cash for clunkers program, which gave consumers cash to swap aging gas-guzzlers for new, more fuel efficient models. High gasoline prices also added to the rise in sales.
Motor vehicle and parts sales surged 10.6 percent in August, notching their biggest rise since October 2001. The auto scheme ended in August.
The retail sales report also showed signs of strength across almost all sectors, with the exception of furniture and building materials, evidence that household spending was probably mending. It also added to views that the economy was starting to emerge from its worst recession in seven decades.
Consumer spending accounts for about 70 percent of U.S. economic activity.
Excluding motor vehicles and parts, sales jumped 1.1 percent in August after falling 0.5 percent in July. Economists had expected a 0.4 percent increase.
Gasoline station sales jumped 5.1 percent in August, reflecting a surge in gasoline prices during the month, after falling 1.5 percent in July. Excluding gasoline, retail sales rose 2.4 percent versus a 0.1 percent fall in July. Sales of building materials declined 1.2 percent in August after falling 1.8 percent in July.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)