Fueled by pent-up demand for apparel, more seasonable weather, and a solid back-to-school season, retail sales rose 5.8% during the third quarter, according to a National Retail Federation (NRF) report. NRF forecasts 4.1% sales growth for 2003, up from its July prediction of a 3.5% increase. The organization is also projecting a 5.7% leap in holiday sales this year, to $217.4 billion.
“The long-awaited bounce in economic activity has finally arrived,” NRF chief economist Rosalind Wells said in a statement. “While we had forecast a pick-up in the second half of the year, this kind of strength was not anticipated.”
Wells said that a major growth contributor has been in business investment. Real spending by retail businesses on equipment and software increased 8% at an annual rate in the second quarter following an extended period of weakness going back to 2000. At the same time, consumers’ disposable income has continued to be boosted by withholding-tax cuts and child-tax credits as well as a high level of mortgage refinancing, the NRF said. Businesses have also been bolstered by an improving stock market and low interest rates.