US retail sales, a crucial motor of economic growth, rose a stronger-than-expected 0.6% last month as American consumers boosted their spending, a government report showed today.
Excluding vehicle sales, the Commerce Department said retail sales rose an improved 0.4% in September.
The latest readings on consumer spending defied expectations as most economists were anticipating a 0.2% rise in overall retail sales and a 0.3% increase in sales excluding cars.
Sales surged compared with August, when retail sales grew a lacklustre 0.3%, suggesting Americans are weathering a widespread housing downturn which has dented home values across many parts of the country.
Economists have been watching retail activity closely amid fears consumers would cut back their spending because of the housing slump and a related credit squeeze which has forced many banks to tighten their lending standards.
A separate US government report showed that high energy costs pushed up wholesale prices by a sharp 1.1% in September, but core inflation excluding volatile components remained tame.
The producer price index (PPI), a measure of inflation at the wholesale level, showed a much steeper gain than the 0.5% increase expected on Wall Street.
But the core rate, watched closely by economists since it excludes volatile food and energy components, was below the consensus forecast with a 0.2% gain.
The headline index showed the largest gain since February 2007, but the tame core figure should give comfort to those who argue inflation is in check.
The Federal Reserve last month cut key interest rates and said the economy may be at risk of further weakness, shifting gears after focusing on inflation threats in the past year.
