U.S. retail sales rose broadly in August and
consumer sentiment hit a 14-month high in September, supporting expectations
for sturdy economic growth in the third quarter. The data on Friday helped ease
concerns about soft consumer spending, which had lagged other fairly upbeat
economic data covering manufacturing, services and housing. Several big Wall
Street firms bumped up their GDP growth forecasts on the news.
The Commerce Department said retail sales, which
account for a third of consumer spending, increased 0.6 percent last month
after an upwardly revised 0.3 percent gain in July, as Americans stepped up
purchases of automobiles and a range of other goods.
In a sign of underlying strength, so-called core sales
increased 0.4 percent in August. Core retail sales exclude purchases of
automobiles, gasoline, building materials and food services, and correspond
most closely with the consumer spending component of gross domestic product.
Separately, the Thomson Reuters/University of Michigan's
consumer sentiment index rose to 84.6 in early September, the highest reading
since July 2013, from 82.5 in August. A gauge of income expectations hit its
highest level since November 2008.
A third report showed only a modest increase in business
inventories in July, suggesting restocking would not provide a boost to growth
in the third quarter. The economy grew at a 4.2 percent pace in the
second quarter.
GROWTH ESTIMATES
LIFTED
August's increase in core retail sales followed an upwardly
revised 0.4 percent gain in July that helped put them 4.1 percent above their
year-ago level. While that remains below a pre-recession pace of about 5.5
percent, it nevertheless bodes well for economic growth.
Macroeconomic Advisers raised its third-quarter GDP growth
estimate by two-tenths of a percentage point to a 3.3 percent annual rate, as
did Goldman Sachs. Morgan Stanley raised its forecast to a 3.5 percent rate
from 3.4 percent.
Economists said it was not clear whether the recent raft of
positive data would prompt the Federal Reserve next week to signal it was
moving a bit closer to raising interest rates. The Fed, which meets on Tuesday
and Wednesday, has said it would likely wait a "considerable time"
after ending a bond-buying program in October before hiking rates from near
zero.
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