A gauge of US consumer spending rose in September as Americans appear to have snapped up Apple's new iPhone and bought leisure goods, but falling sales of cars pointed to sluggish economic growth during the third quarter.
Despite the signs of strength, spending could weaken as other data today showed consumer confidence fell sharply in October.
Confidence was hit by a 16-day partial shutdown of the federal government early in this month, which economists expect will hurt growth in the fourth quarter.
Retail sales, excluding cars, petrol and building materials, increased 0.5% last month after a 0.2% gain in August, Commerce Department figures showed.
The so-called "core sales" correspond most closely with the consumer spending component of gross domestic product. Economists polled by Reuters had expected core retail sales to increase 0.4% in September.
In a separate report, the Conference Board, an industry group, said its index of consumer attitudes dropped to a lower-than-expected 71.2 in October from 80.2 in September. Demand is still not strong enough to ignite worries about inflation.
In a third report, the Labor Department said its seasonally adjusted producer price index dipped 0.1% last month, the first decline since April, after advancing 0.3% in August. A Reuters survey of economists had forecast prices received by the nation's farms, factories and refineries would rise 0.2% in September.
In the 12 months up to September, wholesale prices rose 0.3%, the weakest reading since October 2009. That compared to a 1.4% increase in August.
The tame wholesale inflation reading, coming on the heels of weak home sales and manufacturing production, as well as sluggish hiring, should provide the Federal Reserve with ammunition to maintain monthly bond purchases for a while as it tries to nurse the economy back to health.
Officials from the US Federal Reserve meet today and tomorrow to assess the economy and deliberate on monetary policy. They are expected to keep the monthly $85 billion bond purchasing programme in place until at least next March, according to a Reuters poll.
But there are some pockets of strength in the economy. Another report showed resilience in the housing market, with single family home prices posting their largest annual gain in over seven years in August.
The S&P/Case Shiller composite index of 20 metropolitan areas rose 0.9% on a seasonally adjusted basis, beating economists' expectation of a 0.6% gain.
Compared to a year earlier, prices were up 12.8%, beating economists' expectations of 12.5% and marking the strongest gain since February 2006, when the increase was 13.8%.
Core retail sales last month were boosted by a 0.7% advance in receipts at electronics and appliance stores.
Economists polled by Reuters had expected core retail sales to increase 0.4% in September.
The increase last month probably reflected sales of Apple's new iPhone. Those sales likely boosted receipts at non-store retailers, mostly Internet sites, which increased 0.4% in September. Apple said it sold 33.8 million iPhones in the September quarter.
While Americans bought smart phones, they cut back on car purchases, with sales at car dealers falling 2.2%, the biggest drop since October last year.
That pushed down overall retail sales, which fell 0.1% in September. It was the first decline since March and followed a 0.2% gain in August. Economists had expected retail sales to edge up 0.1% last month.
US households also bought furniture, sporting goods and some building materials and garden equipment. Clothing sales fell 0.5%, the biggest drop since April 2012.
While core retail sales implied some strength in consumer spending, that probably will not alter views that economic growth slowed in the third quarter.
Data on home sales, manufacturing production and hiring have all suggested growth took a step back from the second quarter's 2.5% annual pace.
A drop in wholesale food prices offset a rise in the cost of energy, depressing overall producer prices in September. Food prices fell 1% as the cost of processed poultry recorded its biggest decline since February 2011.