Retail Sales Surge 1.1% in September – Largest Gain in Seven Months

October 15 00:00 2011

New York, October 15 ( – In a welcome break from the gloomy and dismal retail sales trend of the past seven months, US consumer retail spending rose 1.1% in September, as reported by the Commerce Department on Friday. Americans spent more on autos, clothing and furniture last month, which was an encouraging sign for the sluggish economy. Auto sales led the recovery with a rise of 3.6% and excluding that category, the sales increased 0.6%.

The August figures were revised from the earlier no gain to an increase of 0.3% by the government. Additionally, a Commerce report showed that whereas sales rose for a third straight month, stockpiles of businesses increased for a 20th consecutive month in August indicating that businesses were confident enough in the economy to keep increasing their stockpiles.

Since consumer spending accounts for 70% of economic activity, stronger spending can eliminate concerns about impending recession. Paul Dales, senior U.S. economist for Capital Economics said that the increase “shows that households are not completely down and out,” and added that the data correspond with an annual growth rate of 2% for consumer spending growth in the July-September quarter.

While cautioning that weak hiring will prevent continued spending at this rate, he said that “sales growth might not remain this strong, so although a recession has become less likely, households still can’t be relied on to drag the US economy out of its continued malaise.”