US retail sales rise, economy seen accelerating

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FE Team | Published: October 16, 2011 00:00:00 | Updated: February 01, 2018 00:00:00

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WASHINGTON, Oct 15 (Reuters): US retail sales in September grew at the fastest pace in seven months as consumers shook off concerns about a weak stock market and political gridlock, giving a bit more momentum to the economic recovery. The data, which beat economists' expectations and eased concerns the US could slip back into recession, overshadowed a separate report showing a surprise drop in consumer confidence in early October. The Commerce Department said Friday that retail sales rose 1.1 per cent in September, with strong auto purchases providing a big boost. Sales for August and July were revised higher as well. "Reports of the consumer's demise have been greatly exaggerated," said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Conn. US stocks rose on the retail data and on growing optimism the euro zone would be able to contain its debt crisis. Prices for US government debt fell as investors took on more risk. Consumer spending accounts for about two thirds of US economic activity, and the report suggested the economy had more vigor over the past three months than earlier believed. Economists across Wall Street bumped up forecasts, with Macroeconomic Advisers saying the country's economic output likely grew at a 2.7 per cent annual rate in the third quarter, six-tenths of a point more than its previous view. "It looks like third-quarter GDP is going to be better than the first and second quarter combined," said John Canally, an investment strategist and economist for LPL Financial in Boston. However, signs the US recovery is strengthening -- growth averaged under a 1 per cent pace in the first half of the year -- have not dispelled recession risks.