US retail sales rise slightly; consumer spending strong
WASHINGTON (Reuters) - U.S. retail sales barely rose in September as a rebound in motor vehicle purchases was offset by the biggest drop in spending at restaurants and bars in nearly two years.
But other details of the report from the Commerce Department on Monday were upbeat and suggested that consumer spending ended the third quarter with strong momentum, which should provide a boost to economic growth despite anticipated drags from weak exports and a struggling housing market.
Retail sales edged up 0.1 percent last month after a similar gain in August. Economists polled by Reuters had forecast retail sales increasing 0.6 percent in September.
Retail sales in September rose 4.7 percent from a year ago.
Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.5 percent last month. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
Data for August was revised down to show core retail sales were unchanged instead of the previously reported 0.1 percent gain. Consumer spending, which accounts for more than two thirds of U.S. economic activity, is being driven by a robust labor market, with the unemployment rate near a 49-year low of 3.7 percent.
Tight labor market conditions are gradually pushing up wage growth. Solid consumer spending should help to offset the impact on the economy from a widening trade deficit and persistent weakness in the housing market.
STRONG ECONOMIC GROWTH
Growth estimates for the third quarter are above a 3.0 percent annualized rate. The economy grew at a 4.2 percent pace in the second quarter.
Strong economic growth likely will keep the Federal Reserve on course to raise interest rates in December. The U.S. central bank hiked rates last month for the third time this year.
The U.S. dollar dropped against a basket of currencies and prices of U.S. Treasuries slightly pared losses after the data on Monday. U.S. stock index futures were trading marginally lower. Last month, auto sales surged 0.8 percent after declining 0.5 percent in August. Receipts at clothing stores rebounded 0.5 percent after tumbling 2.8 percent in August. Online and mail-order sales soared 1.1 percent in September after rising 0.5 percent in the prior month.
Receipts at furniture stores increased 1.1 percent. Spending at hobby, musical instrument and book stores rose 0.7 percent last month. There were also increases in sales at electronics and appliances stores.
But Americans cut back on spending at restaurants and bars, with sales dropping 1.8 percent. That was the biggest decline since December 2016.
While the Commerce Department said it was impossible to determine the impact of Hurricane Florence on the data, disruptions caused by the storm could have hurt sales at restaurants and bars last month.
Sales at building material stores nudged up 0.1 percent in September. Receipts at service stations fell 0.8 percent, likely reflecting a moderation in gasoline prices.
(Reporting by Lucia Mutikani; Editing by Paul Simao)