Sales at U.S. retailers fell in September, but rose excluding motor vehicles for a second straight month in September, raising cautious optimism consumer spending could support the economic recovery.
The Commerce Department said on Wednesday total retail sales fell 1.5 percent in September, the biggest decline since December, after surging by a revised 2.2 percent in August. Sales in August were previously reported to have increased by 2.7 percent.
Analysts polled by Reuters had forecast headline retail sales falling 2.1 percent in September.
There's solidity, or new strength, in all discretionary spending categories and many of those were strong last month, said Pierre Ellis, senior economist at Decision Economics in New York. We evidently have hit the bedrock level of consumer spending and can even see a little bit of normalcy going forward.
U.S. stock index futures, already up more than 1 percent, extended gains on the retail sales report. Sentiment was buoyed by forecast-beating results from Intel Corp
Overall retail sales in September were dragged down by a drop in vehicle purchases following the end of the government's popular cash for clunkers program in August.
That plan gave consumers cash to trade in aging gas-guzzlers for new, more fuel efficient models. Motor vehicle and parts sales tumbled 10.4 percent in September, the largest fall since August 2005, after rising 7.8 percent the prior month.
Excluding motor vehicles and parts, retail sales rose by a bigger-than-expected 0.5 percent in September after increasing 1.0 percent in August. That cemented the view that consumer spending recovered and the economy started growing in the third quarter after the worst U.S. recession since the 1930s.
Economists had expected a 0.2 percent increase.
Consumer spending normally accounts for about 70 percent of U.S. economic activity. There are worries that relentlessly high unemployment will remain a drag on consumer spending and take some steam out of the economy's nascent recovery from a recession that started at the end of 2007.
The unemployment rate rose to a 26-year high of 9.8 percent in September from 9.7 percent in August.
Sales outside motor vehicles in September were probably supported by back-to-school buying, as well as the best furniture and home furnishings sales since January 2007.
Gasoline station sales rose 1.1 percent in September after rising 4.7 percent in August. Excluding gasoline and motor vehicles, retail sales rose 0.4 percent versus a 0.6 percent gain in August.
Sales of building materials dipped 0.2 percent in September after a 1.2 percent drop the prior month.
A separate report from the Labor Department showed U.S. import prices rose just 0.1 percent in September as the price of imported petroleum dipped, making overall import prices slightly undershoot expectations.
Separately, U.S. mortgage applications dipped last week as interest rates on 30-year loans rose above 5 percent for the first time in four weeks after falling to a four-month low, the Mortgage Bankers Association said.
The 5 percent level is seen as a psychological tipping point, and has recently sparked a boom in refinancings.
(Reporting by Lucia Mutikani; Additional reporting by Alister Bull in Washington and Julie Haviv and Ellen Freilich in New York; Editing by Andrea Ricci)