Retail sales perk up but core reading fizzles

Retail sales bounced back in September after two sluggish months, but a core measure remained weak, intensifying concerns about consumer spending in the second half of the year.

Sales rose 0.6%, matching economists’ estimates. But excluding volatile categories -- autos, gasoline, food services and building materials -- sales edged up 0.1%, well below the 0.4% economists had forecast.

"The stagnation in underlying sales through the quarter is a clear illustration that consumption growth will be weaker in the fourth quarter," economist Paul Ashworth of Capital Economics wrote in a note to clients..

Auto sales rose 1.1%, while gasoline station sales jumped 2.4% on rising prices.

Shoppers also open their wallets for other categories. Sales increased 1% at furniture stores, 1.4% at sporting good stores, 0.8% at restaurants and 0.3% online.

Those more than offset declines of 0.7% at department stores and 0.9% at electronics outlets.

Other indicators pointed to a healthy advance in Americans purchases. Last month, consumer confidence reached the highest level so far in the seven-year-old economic recovery. And a closely-watched measure of service sector activity hit an 11 month high.

U.S. shoppers splurged in the spring but took a breather in July and August. Household pocketbooks generally have been supported by cheap gasoline, solid job and income growth, and better balance sheets. The Federal Reserve is closely monitoring consumer spending as it considers raising interest rates in coming months for the first time in 2016.

Consumption has been solid this year but offset by the listless business investment and exports, resulting in weak economic growth in the first half of 2016.