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Retail sales rose strongly in September on autos
Retail sales increased 1.1 pct. in September, largest gain in 7 months led by auto sales
By The Associated Press

WASHINGTON (AP) ' U.S. consumers stepped up their spending on retail goods in September, a hopeful sign for the sluggish economy.

They spent more on autos, clothing and furniture last month to boost retail sales 1.1 percent, the Commerce Department said Friday. That was the largest gain in seven months.

Auto sales rose 3.6 percent to drive the overall September increase. Excluding that category, sales increased a solid 0.6 percent.

The report followed a weak month of retail spending in August. And the government revised that month's sales figures up to 0.3 percent after initially reporting no gain.

The retail sales data are the government's first look at consumer spending each month. Stronger spending could help tamp down concerns that the economy is at risk of a recession.

Automakers reported a rebound in sales in September. Demand was high for SUVs and pickups even though a gallon of gas cost nearly $1 more last month than a year ago.

Major retailers also reported strong demand. The International Council of Shopping Centers said revenue rose 5.5 percent last month, compared to sales a year ago. Target Corp., Limited Brands Inc. and Kohl's Corp. posted strong gains as consumers went for discounted merchandise.

Consumer spending is closely watched because it accounts for 70 percent of economic activity. The overall economy grew at an annual rate of 0.9 percent in the first six months of the year. That was the weakest growth since the recession ended in June 2009.

High unemployment and steep gasoline prices forced many consumers to cut back on spending this spring. Without more jobs or higher pay increases, they are likely to keep spending cautiously.

In September, the economy generated 103,000 net jobs. That's enough to calm recession fears, but it is far from what is needed to lower the unemployment rate, which stayed at 9.1 percent for the third straight month.

Employers have added an average of only 72,000 jobs in the past five months. That's far below the 125,000 per month needed to keep up with population growth. And it's down from an average of 180,000 in the first four months of this year.

Economists believe the economy will rebound in the second half of this year. But they expect only modest growth of around 2 percent. That's far below what is needed to significantly lower the unemployment rate.

For the holiday shopping period, the National Retail Federation, the nation's largest retail trade group, expects sales to rise 2.8 percent. That would be smaller than the 5.2 percent increase during last year's winter holidays but slightly ahead of the 2.6 percent average increase for November and December sales over the past 10 years.

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