August retail sales (excluding automobiles, gasoline stations and restaurants) increased 0.5 percent seasonally adjusted month-to-month and 2.7 percent unadjusted year-over-year, according to the National Retail Federation.

When combined with revisions to July, August sales indicate a consistent improvement in consumer confidence and spending but run contrary to August's lackluster jobs report. The NRF anticipates upward revisions in employment and payroll numbers next month.

“The rise in consumer confidence, labor markets and retail sales is encouraging,” say Jack Kleinhenz, chief economist, NRF. “August sales figures signal that consumers are willing and ready to spend as the economy improves. However, until the pace of income picks up, we should not expect a sustained surge in spending."

All retail categories improved over the previous month with the exception of general merchandise stores. Even though year-over-year sales slowed from 4.2 to 2.6 percent, “by-and-large merchants had a strong finish to the back-to-school season, especially those selling clothing and electronics,” says Kleinhenz.

“My overall impression is that the economy is moving in the right direction but that other factors, including rising concerns over the uncertainty in the Middle East, may produce some drag. We remain hopeful but cautious,” he says.