WASHINGTON – Shoppers got their buying groove back last month, propelling sales at the nation's retailers by a strong 1.5 percent. It was the best showing since March.
The sizable gain reported by the Commerce Department (search) on Friday, came after shoppers took a a bit of a breather in August, causing sales to dip by 0.2 percent. The buying bounceback seen in September offered a fresh sign that consumers — the lifeblood of the economy — still have inclination to spend despite soaring energy prices and a questionable jobs outlook.
September's strength was led by a rebound in sales at automobile dealerships, yet consumers also showed a hearty appetite to spend on a wide variety of goods — including electronics and appliances, building materials, garden supplies and clothing.
The sales figure for September was much better than the 0.6 percent rise that some economists were forecasting.
Excluding sales of automobiles, which can swing widely from month to month, sales at all other merchants rose by a brisk 0.6 percent in September — the biggest advance since May and up from a 0.2 percent increase in August. The figure excluding automobile sales also was better than the 0.4 percent rise that some economists were expecting.
In other economic news:
— Wholesale prices edged up 0.1 percent in September, after falling by 0.1 percent in August, the Labor Department (search) said. The showing matched economists' forecasts and suggested that inflation is not a threat to the economy. Excluding food and energy prices, "core" wholesale prices rose 0.3 percent last month, slightly faster than the 0.2 percent rise that some economists were expecting. Core prices dipped by 0.1 percent in August.
Economists closely watch consumer behavior because their spending accounts for roughly two-thirds of all economic activity in the United States.
In September, sales of automobiles rose by 4.2 percent — the biggest gain since October 2001 and a turnaround from the 1.3 percent decline registered in August.
Sales of building materials and garden supplies went up by 1.4 percent in September — twice the 0.7 percent increase reported in August. Electronics and appliance stores saw sales rise by 0.5 percent in September, compared with a 0.8 percent drop the previous month.
At clothing stores, sales increased 0.8 percent, after a 0.7 percent decline. Bars and restaurants' sales rose 0.7 percent, following a 0.5 percent drop. Department store sales advanced 0.9 percent, compared with a 0.7 percent decline in August.
Federal Reserve Chairman Alan Greenspan (search) has largely blamed high energy prices for a slowdown in consumers spending in the late spring and early summer. Oil prices, which have continued to surge, clocked in at $54.76 a barrel on Thursday, a new record.
Economists, meanwhile, believe the Fed probably will boost short-term interest rates for a fourth time this year on Nov. 10, in a bid to make sure inflation, which remains low, doesn't become a problem for the economy in the future.
The latest snapshot of the economy comes with Election Day less than three weeks away. President Bush and his Democratic opponent, John Kerry clashed frequently in their nationally televised debates as well on the campaign trail about how the economy and the country's job market are faring.
Bush says his tax cuts have helped the economy rebound after the 2001 recession and has helped job growth. Kerry argues the tax cuts mainly benefited the wealthy, failed to spur significant job creation and plunged the government's balance sheets deeper into red ink.
The Treasury Department announced Thursday the government registered a $413 billion federal deficit for the 2004 budget year, which ended Sept. 30. The deficit is a record in dollar terms but turned out to be smaller than initial projections.