Consumer spending held steady in September, underscoring a resilient economy now being bolstered by the Federal Reserve, the Commerce Department said Thursday.
Retail sales rose a seasonally adjusted 0.4% in the month, from an unrevised 0.1% gain in August and better than the Dow Jones estimate of 0.3%, according to the advance report.
Excluding cars, sales accelerated 0.5%, better than forecasts for a rise of just 0.1%. The numbers are adjusted for seasonal factors but not for inflation, which rose 0.2% month-on-month as measured by the consumer price index.
In other financial news Thursday, initial unemployment claim Claims came in at a seasonally adjusted 241,000, a decline of 19,000 and below the estimate of 260,000, the Labor Department said.
Claims fell even after hurricanes Helene and Milton, which battered the Southeast in recent weeks causing tens of billions of dollars in damage. Deposits in both Florida and North Carolina fell after jumping the previous week, according to unadjusted data.
Stock market futures were higher after the reports, while bond yields also rose.
Together, the reports show that consumers, who fuel about two-thirds of all economic activity in the US, are still spending and the labor market is holding up after signs of weakening over the summer.
On the retail side, spending increased in miscellaneous retail stores, which posted a 4% increase, as well as clothing stores (1.5%) and bars and restaurants (1%). Those increases offset a 1.6% decline at gas stations as fuel prices fell, along with declines in electronics and appliance stores (-3.3%) and furniture and home furnishing businesses (-1. 4%).
Sales rose 1.7% from a year ago, compared to a CPI rate of 2.4% for the same period.
The data comes on the heels of a month in which the Fed cut its key lending rate by half a percentage point and signaled further lower moves are likely this year and into 2025.
Policymakers have expressed confidence that inflation is on a slide back to the Fed’s 2% target. But they have expressed concern that the labor market is softening even with September’s strong payrolls increase and weekly claims remaining fairly in line after the storm’s jump.
The European Central Bank on Thursday cut its key deposit rate by a quarter, also expressing confidence about inflation along with concerns about a broader economic slowdown.
Despite the drop in initial deposits, ongoing claims, which run back a week, rose to 1.867 million. Along with the drop in storm-hit Florida and North Carolina, claims fell by an unadjusted 7,812 in Michigan, which had been hit by the Boeing strike.
The Philadelphia Fed also reported Thursday that its manufacturing activity index rose to 10.3 in October, representing the difference between companies seeing expansion versus contraction. The reading, from September’s 1.3, was better than the estimate of 3.0.