Retail sales in September showed more of the same modest, mildly encouraging growth for the third month in a row, according to government figures.

The Commerce Department's retail and food services sales tally for September rose to $367.7 billion, up 7.3% from September 2009 and up 0.6% from August 2010, the third month-over-month increase this year.

The momentum is important, easing fears of a double dip into recession. Most analysts see moderate retail growth going forward into the holiday season, which forecasters predict will see a modest increase of between 2% and 3% above last year's sales.

Autos Come in Strong

Excluding auto sales, totals were up 5.4% from the year-ago month and retail sales only were up 7.7%. The Commerce Department's tally is the most complete picture of retail; it includes gas, food and auto sales, as well as the results of Walmart (WMT), the world's largest retailer, which doesn't publicly report monthly sales.

Auto and gas sales remain the strongest segments in retail. Car dealers were up 19% in September, aided by the start of the new model year, while gas stations were up 8.2%.

Nearly all segments of retail saw growth year-over-year, even though September is the first month this year that was not helped by an easy comparison. Last year's sales numbers were held up against the months when the recession began in 2008.

Only department stores saw September sales drop below the same time time last year, down 0.8%. All segments were also up over the sales in August. Clothing and department stores were the only segments dropping below August's sales, down 0.2% and 0.1% month over month, respectively.

Employment Worries Persist

The increases were cold comfort for some industry observers. As long as unemployment remains high, any gain in sales will be a matter of how retailers manage to goad worried shoppers into parting with their money, the experts say.

While a third month of increases is good momentum, consumer spending remains challenged by persistently high unemployment, said Sandy Kennedy, president of the Retail Industry Leaders Association, a merchants' group. "Without a meaningful improvement in the job market, retail sales gains will be sluggish and hard won," he said, in a statement.

But a number of segments that had been beaten down recently showed unexpected strength in September: Hardware and garden centers (up 7.3% year-over-year), electronics (up 5.6%) and home and furniture stores (up 3.1%). And the three also showed momentum going into fall, with month-over-month growth of 1.5% among electronics stores, which had been dragged down by lower electronics prices and the lack of new products recently. Hardware and home stores had more modest monthly increases of 0.6% and 0.5%, respectively.

Sale Prices Are Key

Those increases are a function of consumers responding to attractive pricing, said Brian Sozzi, analyst at Wall Street Strategies. He noted electronics prices have stabilized since a bout of deflation earlier this year, but remain low, and home furnishings prices remain competitive.

"Consumers may be saying 'let me get a piece or two before these deals are no longer being offered'," Sozzi said in an email. He also noted the strength in home sales earlier in the year could be driving some interest in new housewares.

The increase in discretionary, non-essential sales is encouraging and a change in what merchants have seen during this economic cycle, said Matthew Shay, president and CEO of the National Retail Federation.

"There's no question that the industry is in a much better state than this time last year," he said in a statement. But he noted that consumers are still relying on sales and promotions.

"September retail sales show that the economy is continuing to grow, even though it remains at a subpar pace," said NRF Chief Economist Jack Kleinhenz. "Given the stubbornly high unemployment and other challenges that families are facing today, these increases are still quite impressive."

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Kohl's should be thriving in this wretched economy, Mercedes, now that they are high pressuring stroke victims into taking credit card extensions and expensive "services" pushed by their telephone Nazis. My wife had a stroke in July of 2008 and during her rehab she was bombarded by almost daily pitches by Kohls to renew her card, take advantage of a better credit line at a better rate, etc. She had no idea what they were pushing on her and finally agreed to take a new card. On September 12, 2009, my wife died of a massive ruptured brain aneurysm. She had not used her card in months, but was being billed for renewal fees and all the rest of the pile-on charges they get away with. They have been attempting to collect $77 and change from this dead woman--my beloved wife of 49 years--for months now. I paid one outstanding balance on some small prior purchases shortly after her death, but the letters kept coming and now a phone message every other day for the past three week, which I refuse to return. I informed a human being a month ago my wife was dead and that I had informed them of this fact, that she had not used the card for months before her death and I had paid off a small purchase balance. I have filed a complaint with the Federal Fair Trade Commission. And my next step will be to sue them for the emotional duress this constant pounding to collect a $77 charge for services my wife never received has caused to me and our children. Sorry to deliver a rant, but the dead need as much protection from these predators as the living. Sincerely, William T. Conlin Jr. (You may have heard of me as Bill Conlin, a nationally-known sports columnist for the Philadelphia Daily News.)

October 18 2010 at 6:58 PM Report abuse rate up rate down Reply

Who's Winning (and Losing) the Retail Battle Alamy Experts agree, Kohl's has been doing everything right lately, capitalizing on the economic crisis better than it's rival "its rival" ... not it's!

October 18 2010 at 2:13 PM Report abuse rate up rate down Reply