CIT Group survey shows positive retail outlook for next 12 months
The Commerce Department said retail sales rose for the second-straight month in August with a 0.4% increase, roughly in-line with consensus analysts' estimates. Economists surveyed by both MarketWatch and Econoday put the figure at an increase of 0.3%. The range of estimates gathered by Econoday was between a gain of 0.1% and 0.5%. And "retailers and suppliers believe consumer spending is better than last year and gradually making a comeback," according to The CIT Group (CIT). The bank-holding company said data from two surveys of financial executives at small- and middle-market retailers showed 65% of retailers and 69% of suppliers believe consumer spending may return to 2007 levels by the end of 2011. August retail sales, excluding gasoline, inched up 0.2%, so sales were somewhat weak after removing the 1.9% inflation in gasoline prices. The August increase of 0.6%, excluding gas, building materials, and vehicle sales, which fell 0.7% for the month, was the largest gain since March. The Commerce Department also downwardly revised the July retail-sales figure to a gain of 0.3%. "An increase in retail sales in both July and August is encouraging and suggests that the economic recovery continues," Commerce Secretary Gary Locke said. Retailers have pared costs and inventories while keeping staff levels lean and hording cash "amid the continued trepidation about the health of our nation’s economy," CIT said. "While the majority of retailers are cautiously optimistic about their future, more than two-thirds expect revenues to grow over the next 12 months," said Burt Feinberg, managing director head of retail finance at CIT. "The general consensus is that, having weathered the economic downturn, most retailers are in better shape today than in 2009 and have positioned themselves well to meet future consumer demand when it returns." The survey also showed about two-thirds of retailers plan to hire more workers for the holidays this year than in 2009, and 57% expect to stock more inventory than last year. Nearly 70% expect to advertise more aggressively and 72% expect to discount more items this year than last, according to CIT, which conducted the survey with Forbes Insight, the strategic research arm of the media company. Write to Jason Philyaw.