September Retail Sales Gain Cools to Modest 0.1%

Retail sales were held to a gain of just 0.1% in September, as Americans tempered their spending on new cars. But sales were still well ahead of last year, and economists are not ruling out another interest rate increase by the Federal Reserve.

The Commerce Department said Thursday that total retail sales rose last month to a seasonally adjusted $253.4 billion. Analysts had predicted a gain in sales of 0.2%.

A 1.3% drop in sales of new cars and trucks in September--following big gains in July and August--was the biggest factor in the small advance in total retail sales.

Nonetheless, the auto industry is on track to sell a record 16.8 million cars and light trucks this year, even though the industry anticipates some slowing of sales in the fourth quarter.

Excluding the volatile autos category, retail sales rose 0.6% in September, stronger than the 0.5% many analysts were forecasting.

Total retail sales were 10.5% higher than in September 1998. Given that, some economists say Fed policymakers may increase rates for the third time this year when they meet next on Nov. 16.

“The bottom line is that consumer spending is still rising too rapidly for the Fed’s liking,” said First Union economist Mark Vitner.

With the lowest unemployment rate in nearly three decades--4.2%--tame inflation and, until recently, a strong stock market, Americans are still in the mood to spend, economists said.

The job market’s strength was evident in a Labor Department report, also released Thursday, showing the number of Americans filing for unemployment benefits last week fell by 29,000 to 285,000.

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Retail Sales

In millions of dollars; seasonably adjusted:

September: $253.4 billion