Retail gross sales rose 0.4% in September, higher than anticipated; Unemployment claims are falling

Consumer spending held up in September, underscoring a robust economy now getting a boost from the Federal Reserve, the Commerce Department reported Thursday.

The expanded report showed retail sales rose a seasonally adjusted 0.4% month-on-month, compared with the unrevised 0.1% gain in August and better than the Dow Jones forecast of 0.3%.

Excluding auto sales, sales rose 0.5%, beating forecasts for just a 0.1% increase. The figures are adjusted for seasonal factors, but not for inflation, which rose 0.2% month-on-month as measured by the consumer price index.

In other economic news, initial jobless claims totaled a seasonally adjusted 241,000 on Thursday, down 19,000 and below the estimate of 260,000, the Labor Department reported.

Even after hurricanes Helene and Milton, which swept through the Southeast in recent weeks and caused tens of billions of dollars in damage, claims for damages fell. Filings fell in both Florida and North Carolina after surging the previous week, according to unadjusted data.

Stock market futures were higher following the reports, while Treasury yields also rose.

Taken together, the reports show that consumers, who account for about two-thirds of all U.S. economic activity, are still spending and the job market is holding up after signs of weakening over the summer.

On the retail side, spending increased at retailers on other stores, which recorded an increase of 4%, as well as clothing stores (1.5%) and bars and restaurants (1%). These increases offset a 1.6% decline at gas stations due to falling fuel prices, as well as declines at electronics and appliance stores (-3.3%) and furniture and home furnishings stores (-1.4%).

Sales rose 1.7% year-over-year, compared to a CPI rate of 2.4% in the same period.

The data comes a month in which the Fed cut its key interest rate by half a percentage point and indicated that further cuts are likely this year and into 2025.

Policymakers have expressed confidence that inflation is on a sliding path back to the Fed's 2 percent target. However, they expressed concern that the labor market is weakening despite the strong rise in payrolls in September and weekly claims remaining somewhat stable after a jump due to the storm's impact.

The European Central Bank cut its key deposit rate by a quarter point on Thursday, expressing confidence in inflation and concerns about a broader economic slowdown.

Despite the decline in initial claims, ongoing claims, which are a week behind, rose slightly to 1.867 million. Along with declines in Florida and North Carolina, which were hit by severe weather, claims in Michigan, affected by the Boeing strike, fell by an unadjusted 7,812.

The Philadelphia Fed also reported Thursday that its index of manufacturing activity rose to 10.3 in October, representing the difference between expanding and contracting companies. The reading, which was 1.3 in September, was better than the estimate of 3.0.