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Tuesday July 7th, 2015 3:48PM

Gas prices, cars push retail sales up

By The Associated Press
WASHINGTON - U.S. retail sales rose in August from July because consumers paid higher gas prices and bought more cars and trucks. They were more cautious elsewhere, suggesting the weak economy has made many selective about spending.

The Commerce Department said Friday that retail sales increased a seasonally adjusted 0.9 percent. Gas station sales jumped 5.5 percent, the most in nearly three years and a reflection of sharp price increases. Demand for autos increased 1.7 percent.

Outside those categories, sales rose only 0.1 percent. That's below July's 0.8 percent gain. Sales at general merchandise, clothing and electronic stores fell. Sales at grocery stores, sporting goods stores and online retailers were unchanged.

Gasoline sales are heavily influenced by price, and auto sales represent major purchases. Excluding those categories offers more clarity on consumers' willingness to spend.

The government's retail sales data contrasted with reports from the nation's largest retail chains. Many said 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.

Rising gas prices could make consumers more cautious about spending in the coming months. Gas prices averaged $3.87 a gallon nationwide on Friday, 16 cents higher than a month ago and just 7 cents below the 2012 average high.

But they haven't stopped Americans from buying cars. Automakers earlier this month reported the best sales in three years, after seeing rising demand for pickup trucks.

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. That has dragged on the economy and kept businesses from 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.
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