Gas, Car Sales Fuel Retail Sales Growth

U.S. retailers' sales rose a bigger-than-expected 0.6 percent in September on strong demand for cars and gasoline, the Commerce Department said Friday in a report that showed consumers kept spending despite a slumping housing market.

Analysts polled by Reuters were expecting a 0.2 percent increase.

Excluding motor vehicles and parts, retail sales rose 0.4 percent last month, slightly ahead of analysts' expectations for a 0.3 percent increase. Gas stations' sales were up 2 percent in September, the biggest jump since May.

The average price of gasoline spiked in late September after crude oil prices hit a record high of almost $84 per barrel.

U.S. stock futures rose on the strong retail sales data and a weaker-than-expected reading on core producer prices. The dollar also rose on the data, while Treasury debt prices fell.

"People were expecting that perhaps the economy was on the brink of recession, but you can't have a recession if consumers are continuing to spend, and by all means they seem to be continuing to spend," said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.

The data came one day after major U.S. retail chains reported disappointing September sales, which they blamed on unusually warm weather that curbed demand for fall clothing.

The Commerce Department's report also showed weak demand at stores that rely on clothing sales, with department stores reporting a 0.5 percent decline, and clothing and accessory retailers down 0.4 percent.

Excluding cars, parts and gasoline, retail sales rose 0.2 percent. Purchases of motor vehicles and parts, which make up about one-fifth of all sales, rose 1.2 percent.

The report showed strength at electronics and appliance retailers, grocery stores, and health and personal care stores, but furniture and home furnishings retailers — those most sensitive to the housing downturn — saw their biggest sales decline since June.