Retail sales rose strongly in September on autos (AP)

WASHINGTON – U.S. consumers stepped up their spending on retail goods in September, a hopeful sign for the sluggish economy.

They spent more on autos, clothing and furniture last month to boost retail sales 1.1 percent, the Commerce Department said Friday. It was the largest gain in seven months.

Auto sales rose 3.6 percent to drive the overall increase. Still, excluding that category, sales gained a solid 0.6 percent.

The government also revised the August figures to show a 0.3 percent increase, up from its initial report of no gain.

Stocks rose after the release of the report, which is the government's first look at consumer spending each month. The Dow Jones industrial average climbed 87 points in afternoon trading. Broader indexes also rose.

A separate Commerce report showed that businesses added to their stockpiles for a 20th consecutive month in August while sales rose for a third straight month. The increase suggests businesses were confident enough in the economy to keep stocking their shelves.

Stronger consumer spending could help tamp down concerns that the economy is at risk of a recession. Consumer spending is closely watched because it accounts for 70 percent of economic activity.

The increase "shows that households are not completely down and out," said Paul Dales, senior U.S. economists for Capital Economics. Dales said the data correspond with an annual growth rate of 2 percent for consumer spending growth in the July-September quarter.

Dales cautioned that weak hiring will likely prevent consumers from spending at this rate on a month-to-month basis.

"Sales growth is unlikely to remain this strong," he said. "So although a recession has become less likely, households still can't be relied on to drag the US economy out of its continued malaise."

The jump in retail sales prompted some economists to boost their growth forecast for the July-September quarter. Dean Maki at Barclays Capital Research said his group raised its forecast to 2.5 percent, up from 2 percent.

Chris G. Christopher Jr., senior economist at IHS Global Insight, said the increase in spending was an improvement from the first half of the year. Still, he said overall growth was not enough to generate significant hiring gains.

"Do not break out the champagne. Things seem better on the consumer and retail fronts, but consumers still have many problems," he said.

The September gains were broad-based:

‧ Department stores sales increased 1.1 percent, a big turnaround from August when sales had fallen 0.5 percent. The drop was blamed in part on Hurricane Irene disrupting shopping along the East Coast.

‧ A larger category of general merchandise stores, which includes big-chain retailers including Wal-Mart and Target, showed a 0.7 percent rise last month after no gain in August.

‧ Specialty clothing stores sales rose 1.3 percent, after a 0.4 percent August drop.

‧ Sales were up 1.1 percent at furniture stores but edged down a slight 0.1 percent at hardware stores. That surprised economists, who expected more traffic from people seeking to repair damage from the hurricane.

‧ Gas station sales rose 1.2 percent.

The overall economy grew at an annual rate of 0.9 percent in the first six months of the year. That was the weakest growth since the recession ended in June 2009.

High unemployment and steep gasoline prices forced many consumers to cut back on spending this spring. Without more jobs or higher pay increases, they are likely to keep spending cautiously.

In September, the economy generated 103,000 net jobs. That's enough to calm recession fears, but it is far from what is needed to lower the unemployment rate, which stayed at 9.1 percent for the third straight month.

Employers have added an average of only 72,000 jobs in the past five months. That's far below the 125,000 per month needed to keep up with population growth. And it's down from an average of 180,000 in the first four months of this year.

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September auto sales up, allaying fears of recession (Reuters)

DETROIT (Reuters) – Major automakers posted double-digit percentage U.S. sales gains for September in a rebound that General Motors Co said showed the economy was likely to steer clear of a double-dip recession.

Among the Detroit automakers, GM sales rose 20 percent, while Ford's rose 9 percent and Chrysler Group was up 27 percent. Nissan Motor Co saw a sales gain of 25 percent and Volkswagen AG posted a sales increase of 36 percent.

The initial sales reports put industrywide sales on track to near 13 million vehicles on an annualized basis, at the high end of the range of analysts' forecasts.

That would represent the strongest sales pace since April and an increase of roughly 10 percent from the sales rate of September 2010.

Last month's auto sales were bolstered by increased inventory levels for Japanese automakers that had been depleted through the summer, by steady gasoline prices and a trickle back of demand from customers looking to replace aging vehicles, executives and analysts said.

GM sales chief Don Johnson said the September auto sales and other recent economic data "all point to a slow growth scenario but not a double dip."

GM kept its forecast for industrywide auto sales unchanged and said it expected to see increasing sales in October through December.

The top U.S. automaker forecasts overall U.S. vehicle sales of at least 13 million, including medium and heavy duty trucks. That would be up from the sales rate of 12.8 million on that basis in the year to date.

In another indicator of economic resilience, U.S. factory activity expanded at a faster pace than expected in September, the Institute for Supply Management said on Monday.

VW America Chief Executive Jonathan Browning said the September sales results pointed to a moderate increase in U.S. auto sales through the remainder of the year.

"It's hard to give a very simple summary because a lot of people are anxious about the future and you see that in the consumer sentiment, consumer confidence surveys, but at the same time many people are recognizing that this is a good time to buy," he said.

U.S. auto sales represent one of the earliest snapshots of consumer demand.

GM shares were up 1 percent at $20.41 around midday and Ford Motor Co shares were flat at $9.67.

CHRYSLER'S BEST SEPT. SINCE 2007

Chrysler, the No. 3 U.S. automaker, had its best performance for September since 2007. Chrysler is managed and primarily owned by Italy's Fiat SpA.

Stronger showings by Toyota Motor Corp and Honda Motor Co are expected, after the top two Japanese automakers in the U.S. market have returned to full production after having inventories slimmed after the March earthquake and tsunami in Japan.

During the past summer -- typically a busy sales period -- some consumers had held back from shopping for vehicles because the major Japanese automakers had an unusually spare stock of cars on dealer lots.

"A vehicle in content and color isn't something people are likely to compromise. They're more likely to wait. Now this is a release of some pent-up demand, which is exactly what we want to see," said IHS analyst Rebecca Lindland.

Both Toyota and Honda also increased sales incentives in September to lure back consumers, analysts have said.

U.S. new light vehicle auto sales were averaging 13.1 million on a seasonally adjusted annualized basis in the first four months of the year. A diminished supply of vehicles and auto parts began to cut into sales beginning in May.

The annualized sales rate dipped to 11.8 million vehicles from May to August.

Analyst Peter Nesvold of Jefferies & Co said last week that September will be the first month since April not to reflect the effects of the Japanese earthquake and the resulting production disruption.

J.D. Power & Associates as well as Edmunds.com forecast that September sales will be 12.9 million vehicles on the seasonally adjusted annualized basis the industry uses to monitor sales strength.

Before the industry downturn during the recent recession, U.S. also sales averaged nearly 17 million vehicles a year. Sales began to fall in 2008 and by 2009 hit the lowest level since the early 1980s, at 10.4 million vehicles sold.

(Reporting by Bernie Woodall and Ben Klayman, writing by Kevin Krolicki, editing by Matthew Lewis)

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Manufacturing sector grows faster in September (Reuters)

WASHINGTON (Reuters) – Factories grew more quickly in September as production and hiring increased, suggesting that manufacturing would help keep the economy from slipping into a new recession.

Other data on Monday offered more good news for the troubled U.S. economy, with strong demand for new motor vehicles putting sales on track to surpass August's rate, and construction spending unexpectedly rebounding in August.

"That hardly sounds like an economy flat on its back. The economy is still moving forward. But no one should confuse direction with speed," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

September marked the 26th straight month of expansion in a sector that has shouldered the broader economic recovery, and the factory report implied that an outright contraction in output would probably be avoided.

The Institute for Supply Management said its index of national factory activity rose to 51.6 last month from 50.6 in August, boosted by a rebound in production and increased factory hiring. But new orders fell for third month.

Economists had expected the index to edge down to 50.5. A reading above 50 indicates expansion in manufacturing.

The data was eclipsed in financial markets by Greece's admission that it would miss its deficit target this year, which weighed on stocks worldwide. Prices of U.S. Treasury debt rallied, while the dollar rose against a basket of currencies.

Europe's worsening debt crisis has left the U.S. economy on the edge of a new downturn. The economy grew at a 1.3 percent annualized rate in the second quarter, an improvement from the 0.4 percent in the January-March period.

The growth in U.S. manufacturing is bucking a global trend. Factory activity in Europe and Asia slumped in September to levels not seen since the depths of the financial crisis as export demand dropped.

The Global Manufacturing PMI, compiled by JPMorgan with research and supply organizations, contracted for the first time in over two years.

VEHICLE SALES, CONSTRUCTION SPENDING STRONG

The Federal Reserve last month announced a new measure designed to push long-term borrowing costs lower by shifting assets on its balance sheet to help the tentative economy.

Last week, Fed Chairman Ben Bernanke said the U.S. central bank might need to ease monetary policy further if inflation or inflation expectations fell significantly.

For now, indications are that the economy will avoid a recession and remain on a slow growth track, even as weak incomes constrain consumer spending -- the main engine of growth.

But households were more willing to spend on motor vehicles last month. Reports so far from General Motors, Chrysler and Volkswagen suggest sales could be about 8 percent higher than August's on a seasonally adjusted annualized basis.

A separate report from the Commerce Department showed an unexpected rebounded in construction spending in August as outlays on state and local government building projects rose sharply.

Construction spending rose 1.4 percent to an annual rate of $799.15 billion, the Commerce Department said. Economists had forecast a 0.3 percent drop.

"Spending should rise in the third quarter as a result of post-(Hurricane) Irene repairs. Construction is set to add to GDP growth in third and fourth quarter but the sector is still very weak," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.

Spending on non-residential structures rose in the second quarter at its quickest pace since the third quarter of 2007.

Data last week showed that cash-rich U.S. businesses continued to invest in machinery, a trend that economists expect to hold and keep the economy expanding.

Manufacturing accounts for about 12 percent of gross domestic product and almost 11 percent of nonfarm employment.

The tenor of the ISM manufacturing report was strengthened by an increase in hiring last month, which could be a good omen for Friday's employment report.

The economy failed to add jobs in August, leaving the unemployment rate at a lofty 9.1 percent.

Other details of the factories survey showed production rebounded last month after contracting in August. However, new orders contracted for a third straight month, potentially pointing to a pullback in manufacturing in the months ahead.

"The main concern going forward would be if new orders didn't pick up," said Bradley J. Holcomb, chair of the ISM manufacturing business survey committee in Dallas, Texas.

But inventories are growing at a slower pace and the ISM viewed customers' supplies as too low, which should boost future orders. In addition, orders for exports rose and suppliers are taking a little bit longer to make deliveries to manufacturers, which is also a good sign.

(Additional reporting by David Lawder in Washington, Ellen Freilich in New York and Bernie Woodall in Detroit; Editing by Dan Grebler)

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With funereal grief, America marks September 11 (Reuters)

NEW YORK (Reuters) – Children yearned for lost parents and grown men and women sobbed in grief over the hard stone that bore the names of nearly 3,000 dead as America on Sunday commemorated the 10th anniversary of the September 11 attacks.

The name of every person killed in al Qaeda's hijacked plane attacks was read in the hours-long centerpiece of a heart-wrenching ceremony.

"May your soul finally rest in peace. Your son Nathan and I, as the years go by, grow strong. Goodbye, my dear friend, my teacher and my hero," said Candy Glazer at the Ground Zero commemoration where the World Trade Center twin towers stood.

Glazer's husband, Edmund Glazer, cheerfully called his wife on September 11 from the first-class cabin of Flight 11 from Boston to tell her he made his flight to Los Angeles. He died when the plane hit the World Trade Center's north tower -- the first in a series of horrific events on that sunny Tuesday morning.

Thousands gathered at the site on a clear morning to grieve. With security tight and no traffic, there was an eerie silence where a decade ago the 110-storey skyscrapers collapsed, sending a noxious cloud over lower Manhattan.

"God is our refuge and strength," President Barack Obama said, reading from Psalm 46, in New York.

The ceremony -- with bagpipes, youthful voices singing the national anthem and firefighters holding aloft a tattered American flag retrieved from Ground Zero -- drew tears. Family members wore T-shirts with the faces of the dead, carried photos, flowers and flags in an outpouring of emotion.

For the first time, relatives saw the just-finished memorial and touched the stone where the names of their dead loved ones were etched. Some left flowers, others small teddy bears. Some used pencils to scratch the names on paper, some took pictures, others leaned against the stone and cried.

Many wept as the names of the dead were read by wives and husbands, fathers, mothers, sisters, brothers and children, some choked with emotion at their personal loss.

"I haven't stopped missing my Dad. He was awesome," said Peter Negron, who was just a child when his father, Pete, was killed in one of the stricken towers. "I wish my Dad had been there to teach me how to drive, ask a girl out on a date and see me graduate from high school and a hundred other things I can't even begin to name."

The September 11, 2001, attacks claimed the lives of people from more than 90 countries. They were followed by al Qaeda bombing assaults in London, Madrid and elsewhere and brought an international campaign aimed at ferreting out their members.

The attacks are now such a part of American life that they are included in the school curriculum. This was the first anniversary that included a U.S. president.

Obama was set to visit all three attack sites: New York, the Pentagon and a field in Shanksville, Pennsylvania.

At the Pentagon, Vice President Joe Biden said, "Al Qaeda and bin Laden never imagined that the 3,000 people who lost their lives that day would inspire 3 million to put on the uniform, and harden the resolve of 300 million Americans."

SUNSHINE AND SHADOW

The New York memorial includes two plazas in the shape of the footprints of the twin towers with cascading 30 foot waterfalls. Around the perimeters of pools in the center of each plaza are the names of the victims of the September 11 attacks and an earlier 1993 attack at the trade center.

"Ten years have passed since a perfect blue sky morning turned into the blackest of nights," New York Mayor Michael Bloomberg said during the ceremony.

"Since then, we've lived in sunshine and in shadow, and although we can never unsee what happened here, we can also see that children who lost their parents have grown into young adults, grandchildren have been born and good works and public service have taken root to honor those we loved and lost."

Obama visited the North Memorial Pool, which sits in the footprint of the north tower. He walked around the pool hand-in-hand with first lady Michelle Obama, former President George W. Bush and his wife, Laura.

The president touched the etched names of the dead before he greeted some family members.

SECURITY ALERT

Police in New York and Washington were on high alert against a "credible but unconfirmed" threat of an al Qaeda plot to attack the United States again on the 10th anniversary.

Security was especially tight in Manhattan. Police set up vehicle checks on city streets as well as bridges and tunnels. There was an unprecedented show of force from Times Square in midtown to the area around Ground Zero farther to the south.

"It was our Pearl Harbor," said John McGillicuddy, 33, a teacher from Yonkers, New York, referring to the Japanese attack that led America to join World War Two.

"Every year, September is always rough," he said, as he prepared to grieve his uncle, Lieutenant Joseph Leavey, a New York firefighter who died in the south tower on September 11.

Pope Benedict prayed for September 11 victims and appealed to those with grievances to "always reject violence."

In the September 11 attacks, 19 men from the Islamic militant group al Qaeda hijacked airliners and crashed them into the World Trade Center, the Pentagon outside Washington and a field in Shanksville, Pennsylvania. Just weeks after the attacks, U.S. forces invaded Afghanistan to topple that country's Taliban rulers who had harbored al Qaeda leaders.

In May, nearly a decade after September 11, U.S. forces killed al Qaeda leader and the mastermind of the attacks Osama bin Laden in Pakistan. [ID:nN1E78119Q] The attacks prompted wars in Afghanistan and Iraq, where the Pentagon still has a large number of troops and where violence persists. [ID:nL3E7KB03N]

"The 9/11 attacks were the beginning of a long winter in world history," NATO Secretary-General Anders Fogh Rasmussen said in Brussels. "But events in the Middle East have renewed our faith that although the desire for freedom can be repressed, it can never be extinguished. The Arab spring is a new season of hope for us all."

Sunday's Ground Zero ceremony had moments of silence marking when the planes hit the twin towers as well as when they collapsed. Other moments of silence marked when a plane hit the Pentagon and another crashed in Shanksville after passengers fought back against the hijackers.

Paul Simon gave a low-key acoustic rendition of his song "The Sound of Silence," which begins with the line "Hello darkness, my old friend, I've come to talk with you again."

After a faltering start, there are signs of rebuilding progress at the World Trade Center. The new One World Trade Center rises more than 80 stories above the ground as it inches to its planned 1,776 foot height -- symbolic of the year of America's independence from Britain.

For many, Sunday was the closest they came to a funeral for loved ones. With the memorial complete, it offered for the first time something resembling a final resting place and a formal place to mourn.

"When we came out here 10 years ago there was a hole in the earth and that's how we felt," said Dakota Hale, 25, of Denver, who lost his stepfather, flight attendant Alfred Marchand.

"Now, 10 years later there is grass and water, and it feels kind of like a new beginning."

(Writing by Mark Egan, additional reporting by Ellen Wulfhorst, editing by Eric Beech, Vicki Allen, Doina Chiacu)

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