US sales increases driving economy

US retail sales excluding cars rose in September following an August rise that was almost twice as much as reported a month earlier, the government said.

The gain was the fifth straight and suggests consumer spending helped the economy grow in the third quarter at the fastest pace in almost four years.

Purchases at the nation’s retailers, excluding car dealers, increased 0.3% last month to $244 billion, following a 1.2% gain in August, the Commerce Department said in Washington.

The government had previously reported a 0.7% gain for August. Including vehicles, sales fell 0.2% last month after a 1.2% jump. Purchases of clothing and building materials led the September increase.

Compared with September of last year, retail sales were up 7.5%, the largest 12-month gain since April 2000. Lower taxes along with a record wave of refinancing are giving consumers the wherewithal to keep purchasing.

The report “makes for a very powerful third quarter and what we are likely to see now is a pick up in production, so the economy has good momentum,’ said Kevin Logan, a senior economist at Dresdner Kleinwort Wasserstein in New York.

Economists had expected total retail sales would fall 0.1% to $318.9 billion last month.

The economy last grew as fast in the final three months of 1999.