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U.S. Sept. Retail Sales Rise 1.5%; Ex-Autos Up 0.6% (Update1)
Oct. 15 (Bloomberg) -- Sales at U.S. retailers rose 1.5 percent in September the most in six months led by spending on automobiles general merchise.

The biggest rise in receipts at automobile dealerships since October 2001 paced the increase in all retail spending last month which followed a revised 0.2 percent decrease in August the Commerce Department said in Washington. Excluding autos sales rose 0.6 percent twice the expected rate after rising 0.2 percent in August.

General Motors Corp. Ford Motor Co. were among automakers to attract customers with special financing price breaks last month to help clear dealer lots. Rising energy costs coupled with subdued job gains may pressure incomes limit the pace of the expansion in the final three months of 2004 after a third-quarter rebound.

``The consumer has always been a source of stability'' said Steven Wieting a senior economist at Citigroup Global Markets Inc. in New York. ``But we have to remember that the very strong pace of spending in the third quarter came in a period when energy costs were stabilizing. We are going to get hit again in the fourth quarter.''

Citigroup's forecast of a 1.3 percent increase matched the largest in a survey before the report.

The numbers were released two two days after president George W. Bush Democratic challenger John Kerry squared off in the last of three debates before next month's election. Kerry a four- term U.S. senator Massachusetts said Bush shortchanged the middle class on jobs health care taxes. Bush called his opponent's record proposals ``out of the mainstream.''

Consumer Spending

Economists expected retail sales would rise 0.7 percent last month after a previously reported drop of 0.3 percent in August based on the median forecast of 72 estimates in a Bloomberg News survey. Sales excluding automobiles were expected to rise 0.3 percent after rising 0.2 percent in August.

Retail sales account for almost half of all consumer spending which in turn accounts for about two-thirds of the economy.

Sales at automobile dealerships parts stores rose 4.2 percent last month after falling 1.3 percent. Sales of cars light trucks jumped to 17.5 million vehicles at an annual rate in September a 5.4 percent increase August according to industry figures released Oct. 1. Auto sales last quarter were the strongest in a year.

General Merchise

General Motors boosted incentives by 6.1 percent last month to $5168 Ford increased theirs by 5.6 percent to $5179 according to CNW Marketing Research an industry group. General Motors the world's largest automaker reported yesterday its first loss car manufacturing in North America in six years.

``Auto companies were able to jam a lot of product out the door by almost giving it away'' Ethan Harris chief economist at Lehman Brothers Inc. in New York said before the report.

Sales at general merchise stores which include department stores rose 1.1 percent last month the most since February after falling 0.3 percent in August. Sales at clothing accessory stores rose 0.8 percent after dropping 0.7 percent. Department stores sold 0.9 percent more merchise than the month before.

Sales at electronics appliance stores rose 0.5 percent while furniture sales fell 0.4 percent. Purchases at sporting goods hobby book music outlets decreased 0.4 percent while sales at food beverage stores rose 0.5 percent. Sales at restaurants drinking places rose 0.7 percent after dropping 0.5 percent a month earlier.

Building Materials

Sales at building material garden supply stores rose 1.4 percent the most in six months after a 0.7 percent increase in August. The jump may be due to purchases to brace for the three hurricanes that hit the southeastern U.S. last month to make reps afterward according to economists.

``Historically hurricanes have not exerted a significant depressing impact on non-auto sales perhaps because people stock up on food water as well as other materials to prepare for recover the storms'' Henry Willmore chief U.S. economist at Barclays Capital in New York said before the report.

Receipts at service stations rose 0.1 percent last month following a 0.1 percent decrease in August. Excluding cars gasoline sales rose 0.7 percent last month the most since March after a 0.2 percent increase.

The rising cost of gasoline other forms of energy poses a threat for the economy in coming months as it siphons money consumers' pockets causing spending on other goods services to slow. The average retail price for all grades of gasoline rose to $2.04 a gallon in the week that ended Oct. 11 the highest in four months according to figures the Energy Department. The price reached a record $2.10 a gallon in May.

Combining Shopping Trips

``We do think that there is some effect by the higher gas prices'' Jeff Noddle chief executive of Supervalu Inc. the owner of Shop 'n Save Save-A-Lot supermarkets said in an interview yesterday. There is ``some evidence of shopping patterns changing somewhat.''

Customers are making fewer trips to Supervalu's stores instead buying more during each visit to prevent having to make a return trip Noddle said. The company based in Eden Prie Minnesota yesterday said net income rose 26 percent in the fiscal second quarter because of lower costs. Sales fell 2.3 percent during the period which ended Sept. 11.

Spending Outlook

Consumer spending is projected to grow at a 3.1 percent annual pace this quarter compared with a 4 percent rise forecast for the third quarter according to the median forecast of economists surveyed in a separate Bloomberg News survey earlier this month. The slowing will cause the economy to cool to a 3.8 percent pace of growth this quarter 4 percent the survey showed.

High fuel costs are coming at a time when employment gains are falling short of expectations. Employers added 96000 workers to payrolls in September the Labor Department reported Oct. 8. An average 103000 people a month found jobs in the third quarter compared with 204000 a month in January through June.

``The sluggish employment situation clearly limits income gains specially at a time when energy health-care costs are soaring'' said Sung Won Sohn chief economist at Wells Fargo & Co. in Minneapolis before the report. ``You will see consumer spending adversely effected by lackluster job growth.''