AFP - US retail sales surged 2.7 percent in August, led by the government's popular "Cash for Clunkers" program that boosted auto sales, the Commerce Department said Tuesday.
  
The monthly increase was the steepest since January 2006, the department said.
  
The jump in retail sales followed a revised 0.2 percent decline in July, worse than the initial estimate of a 0.1 percent drop.
  
The sharp increase in August retail sales surprised most analysts who had expected a 1.9 percent increase.
  
On an annual basis, sales remained 5.3 percent below the August 2008 level.
  
Robust auto sales led the gain, soaring 10.6 percent jump from July, the biggest rise since October 2001, as car owners swapped old vehicles for new, more fuel-efficient models in the government's scrappage rebate program that ended in late August.
  
Excluding auto sales, retail sales rose 1.1 percent in August, stronger than the average consensus forecast of 0.4 percent.
  
Stripping out auto and gasoline sales, so-called "core" retail sales rebounded in August, rising 0.6 percent after falling 0.4 percent in July.
  
The monthly retail sales data signal the direction of consumer spending, which accounts for roughly two-thirds of output in the world's largest economy.