Retail Sales Up 1.1 Percent in September

Retail sales rose a higher-than-expected 1.1 percent in September, led by a 3.6 percent jump in motor vehicles and parts, the Commerce Department said in a report that buoyed hopes for growth in freight transportation volumes.

The month-to-month increase in total retail sales was the largest in seven months. Excluding autos, retail sales increased 0.6 percent. Sales at department stores rose 1.1 percent after two consecutive months of declines.

Retail sales are watched closely because consumer spending accounts for 70 percent of U.S. economic activity. Sales have been tepid this year in the face of a weak housing market and unemployment rates over 9 percent.

Government reports showed business inventories at U.S. companies rose 0.5 percent, above preliminary forecasts, signaling business anticipate a pickup in sales.

Economists said the consumer spending report was a positive sign but questioned whether it can be sustained. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment slipped to 57.5 this month from 59.4 in September, and the index’s gauge of consumer expectations six months from now dropped to 47, the lowest since 1980.

“Consumers seem to be chugging along even though consumer confidence is at recessionary levels, household net worth is falling, unemployment is high and wage gains are outpaced by consumer price inflation,” said Chris G. Christopher Jr., senior principal economist at IHS Global Insight. “It is blatantly obvious that households are dipping into their savings accounts, saving less and that a considerable amount of pent-up demand for autos was released” in September.

Journal of Commerce Economist Mario O. Moreno has forecast that U.S. containerized imports will rise 2.7 percent this year. Import measured in 20-foot-equivalent units fell 1.5 percent in August, PIERS data show.

The Global Port Tracker published by the National Retail Federation and Hackett Associates said last month it expected flat summer volumes at the 10 busiest U.S. container ports to be followed by year-over-year increases of 11.8 percent in September, 9.5 percent in October, 8 percent in November and 4.5 percent in December.

-- Contact Joseph Bonney at jbonney@joc.com. Follow him on Twitter @josephbonney.