By Nicole Maestri - Analysis

SAN FRANCISCO (Reuters) - Forecasting monthly retail sales is like forecasting the weather -- it's far from an exact science and subject to revision.

That was especially apparent in September, when 78 percent of retailers that report sales on a monthly basis posted results that beat Wall Street estimates, according to Thomson Reuters data.

Overall, monthly same-store sales rose 0.6 percent compared with a forecast for a decline of 1.1 percent. The news pushed retail shares higher on hopes of a nascent consumer recovery.

So how were analysts' forecast so far off, and does the stronger-than-expected result mean early forecasts for the 2009 year-end holiday season are too conservative?

Barclays Capital analyst Robert Drbul said September sales show that a recovery in consumer spending is taking hold.

"The results are actually turning positive faster than the trends would have suggested," he said.

But Drbul, along with many industry watchers, caution that it is too early to bet on a strong consumer spending rebound, especially with the unemployment rate at a 26-year high of 9.8 percent. September's results were also helped by easy comparisons with a year ago, when sales were hurt by a financial crisis that threw consumer spending into a tailspin.

"We love positive news just as much as anybody else," said Ellen Davis, spokeswoman for the National Retail Federation, which forecast this week that total holiday sales will fall 1 percent.

"But at this point it's definitely too soon to jump the gun" and raise a forecast that is based on total sales and not same-store sales, she said.

Monthly numbers also do not capture sales at many of the most popular destinations for gift buying, including Wal-Mart Stores Inc and Best Buy Co Inc, making it hard to use the figures as a proxy for total holiday sales.

"We've had difficulty using the current chain store sales sample to estimate retail sales," said Abiel Reinhart, a JPMorgan economist. "The relationship has gotten pretty loose."

SEPTEMBER SALES SMASH CAUSE FOR CELEBRATION?

September marked the strongest showing for retailers since July 2008, when same-store sales rose 1.1 percent. It was also the first positive result since August 2008.

"A late Labor Day and late school starts were expected to benefit September sales, and as it turned out the weather helped as well," according to a note from Carol Levenson, director of research at Gimme Credit.

In addition, this September, stores were not stocked to the hilt with merchandise as they were in boom times. More than a year's worth of recession taught retailers to pare inventory to avoid drastic price cuts.

"One year later from the crisis, you're seeing that so many retailers have figured out how it works under these new circumstances," said Richard Hastings, consumer strategist with Global Hunter Securities LLC.

One more help to retailers -- a low base from which they needed to show improvement.

"Yes, retailers did smash expectations," said Jharonne Martis, director of consumer research for Thomson Reuters. "But they were able to benefit from the easier year-over-year comparisons. September this year marked the first month of what will be a streak of very easy year-over-year comparisons."

"This should definitely not be read as a return of the consumer," she said.

In 2008, same-store sales fell 4.1 percent in October, 7.8 percent in November and 3.6 percent in December.

INSIGHT FROM SAME-STORE SALES WANING

Economists said that since Wal-Mart stopped reporting monthly same store sales earlier this year, it has become harder to use the numbers to gauge total retail sales. Before Wal-Mart went silent, its sales were outpacing rivals as frugal shoppers sought its discount prices.

"There's only 30-some retailers (reporting), and they're very much skewed toward apparel and department stores," said Frank Badillo, senior economist at Retail Forward. "We don't know what Wal-Mart's doing, and they're the lion's share (of sales). We don't know what's happening at all in any of the home goods channels on a monthly basis."

Badillo said September sales confirm his view that department stores and apparel chains are pulling out of their deep sales slump since the financial crisis in 2008.

Retail Forward expects flat sales growth for the holiday fourth quarter. Reinhart expects a 3 percent rise in fourth quarter gross domestic product, but flat consumer spending.

(Additional reporting by Jessica Wohl in Chicago; Editing by Gary Hill)