American Consumer Spending Up in AugustThose looking for a sign that the American economy is on the uptick once more got a glimmer of hope in August courtesy of an increase in consumer spending.

Although modest, the 0.5% increase in retail spending was more than predicted, especially following a stagnant July, the U.S. Commerce Department reported.

The rise in consumer spending coincides with a rise in wages. Incomes rose 0.3% in August, which is the most in three months. This was in line with projections for the month and continues an upward trend. Wages over the past year have posted the biggest gains seen since the end of 2012.

Economists say the data serves as a sign that there is positive forward momentum in America’s economy. The gain in spending comes even after adjustments for inflation were made. August’s 0.5% gain is the biggest recorded jump since March 2014.

America’s increase in spending is related to both durable and non-durable goods purchases. After inflation, durable goods purchases were up 1.9% in August, which is the biggest gain in five months. Non-durable goods purchases, which include such things as clothing and gasoline, also rose an estimated 0.3%.

In the durable goods category, vehicle purchases are a driving force behind economic growth. The annualized rate of car and light truck purchases rose to an estimated 17.5 million. That is the highest number on record since January 2006, according to Ward’s Automotive Group.

Spending on services was also up in August by an estimated 0.4% and disposable income rose 0.3%. The savings rate, however, fell to 5.4% in August, down from July’s 5.6%.

While consumer spending is up, not all markets are enjoying gains. The housing market reported fewer signed contracts in August for the purchase of homes that were previously owned. The decline was recorded at 1%, according to the National Association of Realtors. In addition, Reuters reported, housing shares fell at a greater rate than broader stock indexes.

As economic news brightens, the country’s inflation rate also remains low. Prices that are tied to consumer spending only rose 1.5% year over year in August. Federal policymakers strive for about a 2% gain a year.

Although most of the economic news is positive, Janet Yellen, the fed’s chair warns that America’s economy isn’t completely out of the woods yet, telling Bloomberg that full recovery hasn’t happened yet because too many people are still struggling to find jobs.

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