Business

Car sales push US retail figures up

  • 15 September 2015
  • From the section Business
New Ford F-150 pickups are displayed on the sales lot at Serramonte Ford Image copyright Getty Images

US retail sales rose 0.2% in August, helped by spending on cars, restaurant meals, groceries and clothing, the US Commerce Department has said.

Core sales - which strip out spending on cars, petrol, building materials and restaurants - rose 0.4%.

But separately, factory production slipped in August, falling a sharper than expected 0.5%.

The Federal Reserve has a mixed picture of the US economy ahead of a rate-setting meeting later this week.

Manufacturing output fell last month as car production jammed on the brakes, after a rise of 0.9% in July. Excluding cars, factory output was unchanged.

The US manufacturing sector has been struggling, faced with a strong dollar and slack oversees economies.

A drop in mining production combined with the drop in factory output left overall industrial production down 0.4% during the month.

'Positive news'

But retail sales figures, boosted by rising employment, suggest that a recent stock market sell-off had little impact on consumer spending.

"Today's data are positive news for final demand in the third quarter and should give the Fed more confidence in the spending outlook," said Laura Rosner, an economist at BNP Paribas in New York.

Car dealers and restaurants have especially reaped the benefits of around 2.9 million jobs being added to the economy over the past year.

Sales at car dealers and parts shops have risen 5.7% during the past 12 months, as many people in the US are replacing their older vehicles.

Nearly a fifth of all retail sales tracked by the government come from the car industry.

Purchases at restaurants and bars increased 0.7% in August and have soared 8.2% this year.

Around 372,000 workers have been taken on in the sector over the past year to satisfy demand.

Sales also improved last month at grocers, clothes shops, sports stores and online retailers.

On Wednesday and Thursday the Federal Reserve will meet to decide whether to raise interest rates from near zero.

There is never a risk-free time to raise interest rates, BBC economics editor Robert Peston said.

"In the opaque globalised financial world, they [the Fed] know that all sorts of bubbles and market distortions have been created and pumped up by the steroids of super-cheap dollar debt - but they can't be certain of the scale or even the precise location of these unhealthy imbalances," he said.

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