US sales on the up as consumers hit spending trail

By SCOTT REID
Published on 16/10/2012 00:00

A SPENDING spree by American consumers has triggered the sharpest rise in US retail sales for nearly two years.

Shoppers bought more of everything last month, from cars and fuel to mobile phones and kitchen appliances, according to figures from the US commerce department.

Consumer spending drives about two-thirds of US gross domestic product and the data points to an economy that is growing modestly but still below its potential. Market gains were muted yesterday with the Dow Jones only just ahead at the close in London. Craig Dismuke, an economic strategist at Vining Sparks in Memphis, said: “This is a good end of third quarter and we have some good momentum to the fourth quarter.”

Latest official figures for the second quarter showed that the US economy grew at an annualised rate of 1.3 per cent. Before yesterday’s retail sales report was released, economists were expecting growth to accelerate to 1.6 per cent in Q3.

The report showed broad strength across retailers, with sales of motor vehicles and parts up 
1.3 per cent. Receipts at petrol filling stations rose 2.5 per cent, reflecting an increase in prices paid at the pump.

Other categories were also strong, with sales at electronic retailers up 4.5 per cent. Food and beverage stores reported a 1.2 per cent rise.

“The sales of iPhones might have something to do it with a 4.5 per cent rise in [electronics].” noted Dismuke.