Moody's Investors Services raised its outlook for the consumer durables sector on Thursday, citing signs of improved discretionary consumer spending and potential growth.

The retail sector has struggled during the recession as shoppers have tightened their spending and continue to hunt for bargains.

Many businesses have reduced their inventory levels and cut costs to help combat the spending pullback.

Moody's boosted its outlook for the industry to stable from negative, as it doesn't expect conditions at companies such as household appliance makers, musical instrument makers and recreational equipment makers to materially improve or worsen.

"Given the extent of the dramatic cost-cutting initiatives undertaken during the downturn, even if demand remains flat and does not improve in 2010, both profitability and operating cash flow are likely to get better," Senior Credit Officer Kevin Cassidy said in a statement.