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News > Jobs & Economy
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Retail sales jump in September
Strong auto sales lead retail figure 1.5% higher in September, biggest gain in six months.
October 15, 2004: 10:44 AM EDT

NEW YORK (CNN/Money) - Retail sales posted the biggest gain in six months in September, the government said Friday, helped in large part by strong auto sales as auto manufacturers enticed customers with more juicy incentives.

The Commerce Department reported a 1.5 percent increase in retail sales in September, compared with a revised fall of 0.2 percent in August. Economists surveyed by Briefing.com were forecasting a 0.7 percent increase in the period.

It was the biggest increase since a 2.1 percent gain in March.

Excluding autos, sales rose 0.6 percent, compared to a revised 0.2 percent rise in August and forecasts for a 0.3 percent increase. It was the best showing in the core reading since a 0.9 percnet gain in May.

"This says the U.S. consumer is still in the ball game and playing like a champion," said Drew Matus, senior economist with Lehman Brothers.

The increase was broad based, with only two categories showing a decline.

Auto vehicle and parts sales were up 4.2 percent, as the nation's major auto manufacturers raised cash-back offers and other incentives to move out 2004 models to make room for the new 2005 models. But other categories showed strong growth as well.

Clothing stores showed a 0.8 percent increase in sales, while general merchandise stores posted a 1.1 percent increase. Building materials retailers saw a rise of 1.4 percent, a number that could have been helped by spending before and after a series of four major hurricanes in late August and September.

"Could there have been an impact from the storm? Yes. Can we quantify it? No," said Matus.

Another economist said the strong sales could lead to an upward revision in estimates of gross domestic product, the broad measure of the nation's economic activity.

"The prospects of 4 percent real GDP growth (or possibly more after future data revisions) during the third quarter are back on the table," said Anthony Chan, senior economist with JPMorgan Fleming Asset Management. But at the same time, Chan warned that the report doesn't necessarily mean strong sales will continue through the all-important holiday shopping season.

"We should not be necessarily misled into thinking that this outsized strength will definitely persist," he said. "We need a stabilization or decline in energy prices to sustain such favorable economic activity moving forward."  Top of page




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