Retail sales rose 0.4% in September, better than expected; jobless claims dip

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

Retail sales increased a seasonally adjusted 0.4% on the month, up from the unrevised 0.1% gain in August and better than the 0.3% Dow Jones forecast, according to the advance report.

Excluding autos, sales accelerated 0.5%, better than the forecast for just a 0.1% rise. The numbers are adjusted for seasonal factors but not inflation, which rose 0.2% on the month as measured by the consumer price index.

In other economic news Thursday, initial unemployment claim filings totaled a seasonally adjusted 241,000, a decline of 19,000 and lower than the estimate for 260,000, the Labor Department reported.

Claims fell even following hurricanes Helene and Milton, which tore through the Southeast in recent weeks exacting tens of billions of dollars in damage. Filings in both Florida and North Carolina declined after jumping the previous week, according to unadjusted data.

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

Together, the reports show that consumers, who power about two-thirds of all economic activity in the U.S., are still spending and the labor market is holding up after signs of weakening through the summer.

On the retail side, spending grew at miscellaneous store retailers, which showed an increase of 4%, as well as at clothing stores (1.5%) and bars and restaurants (1%). Those increases offset a 1.6% drop at gas stations as fuel prices fell, along with declines at electronics and appliances stores (-3.3%) and furniture and home furnishing businesses (-1.4%).

Sales increased 1.7% from a year ago, compared with the CPI rate of 2.4% for the same period.

The data comes from a month where the Fed cut its benchmark borrowing rate by a half percentage point and indicated more moves lower are likely this year and through 2025.

Policymakers have expressed confidence that inflation is on a glide path back to the Fed's 2% target. However, they have expressed concern that the labor market is softening even with strong September payrolls growth and weekly claims that have stayed fairly in line after jumping due to the storm effects.

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

Despite the drop in initial filings, continuing claims, which run a week behind, edged higher to 1.867 million. Along with the declines in storm-ravaged Florida and North Carolina, claims decreased by an unadjusted 7,812 in Michigan, which had been hit by the Boeing strike.

The Philadelphia Fed also reported Thursday that its index of manufacturing activity rose to 10.3 for October, representing the difference between companies seeing expansion against contraction. The reading, up from September's 1.7, was better than the estimate for 3.0.

Correction: The Philadelphia Fed index of manufacturing activity was 1.7 in September. An earlier version misstated the figure.