The Commerce Department reported Thursday that consumer spending rose in September, underscoring the resilience of an economy that is now receiving a boost from the Federal Reserve.
Retail sales rose a seasonally adjusted 0.4% month over month, up from an unadjusted 0.1% gain in August and better than Dow Jones' forecast of 0.3%, according to the advance report.
Excluding automobiles, sales accelerated by 0.5%, better than expectations for a rise of only 0.1%. The figures were adjusted for seasonal factors but not inflation, which rose 0.2% on the month as measured by the Consumer Price Index.
In other economic news Thursday, seasonally adjusted initial jobless claims totaled 241,000, down 19,000 and below estimates of 260,000, the Labor Department said.
Claims have fallen even in the wake of Hurricanes Helen and Milton, which tore through the Southeast in recent weeks and caused tens of billions of dollars in damage. Deposits in both Florida and North Carolina fell after the jump the previous week, according to unadjusted data.
Stock market futures rose after the reports while Treasury yields also rose.
Taken together, the reports show that consumers, who power about two-thirds of US economic activity, are still spending and that the labor market is holding up after signs of weakness over the summer.
On the retail side, spending grew at miscellaneous retail stores, which showed a 4% increase, as well as at clothing stores (1.5%) and bars and restaurants (1%). These increases offset a 1.6% decline at gas stations as fuel prices fell, along with declines at electronics and appliance stores (-3.3%) and furniture and home furnishings companies (-1.4%).
Sales rose 1.7% year-over-year, compared to a CPI rate of 2.4% for the same period.
The data comes from a month in which the Fed cut its benchmark borrowing rate by half a percentage point and signaled the possibility of further downward moves this year and into 2025.
Policymakers have expressed confidence that inflation is on track to glide toward the Fed's 2% target. However, they expressed concern that the labor market is softening even with strong September payroll growth and weekly claims remaining fairly flat after jumping due to the effects of the storm.
The European Central Bank on Thursday cut its key deposit rate by a quarter of a percentage point, also expressing confidence in inflation alongside concerns about the broader economic slowdown.
Despite the decline in initial claims, continuing claims, which were delayed by a week, rose to 1.867 million. Along with the decline in storm-ravaged Florida and North Carolina, claims fell by an unadjusted 7,812 in Michigan, which took a hit from Boeing.
The Federal Reserve Bank of Philadelphia also reported Thursday that its index of manufacturing activity rose to 10.3 for October, representing the difference between companies experiencing expansion versus contraction. The reading, up from 1.7 in September, was better than the estimate of 3.0.
Correction: The Philadelphia Fed's index of manufacturing activity was 1.7 in September. An earlier version misstated this number.
