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 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.
"It is further indication that the underlying positive momentum in
the U.S. economy is being sustained," said Millan Mulraine, deputy
chief economist at TD Securities in New York.
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.
The only decline was at gasoline stations, but that reflected
declining prices at the pump that should free up income to support
spending in the months ahead.
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.
U.S. Treasury debt prices fell, while the dollar held near a
six-year high against the yen on the data. U.S. stocks were trading
lower as a new round of U.S. sanctions against Russia hit energy
shares.
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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.
"Retail sales were still somewhat weaker in the third quarter and
recent labor market indicators have been somewhat less encouraging
in August and September," said Scott Anderson, chief economist at
Bank of the West in San Francisco.
"This may be enough to keep the doves at the Fed in wait-and-see
mode," he said.
(Reporting by Lucia Mutikani; Additional reporting by Richard Leong
in New York; Editing by Paul Simao)
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