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Last Updated: Friday, 13 October 2006, 15:09 GMT 16:09 UK
Lower petrol prices hit US retail
Man fills up his car at petrol station in Oklahoma City
Falling petrol prices have skewed the retail figures
A sharp fall in petrol prices last month hit US retail sales, although trading in general goods rose as pressure on household budgets eased.

Retail sales fell 0.4% in September, below market expectations, but excluding petrol purchases they actually rose 0.6%, official data said.

Consumer spending accounts for two thirds of US GDP and is seen as a crucial barometer of economic health.

The figures are being scrutinised due to recent signs of a possible slowdown.

Homes wobble

House sales have cooled dramatically while overall economic growth slowed substantially in the second quarter.

The value of petrol sales fell 9.3% after pump prices dropped by 13%.

Despite the month-on-month decline, retail sales were 5.5% higher in September than a year ago.

However, the US Commerce Department trimmed an earlier estimate of 0.2% growth in August to just a 0.1% rise.

Secure spending

Meanwhile the respected University of Michigan index of consumer confidence indicated that sentiment in the US had reached its highest level since July 2005.

The university's preliminary index jumped from a level of 85.4 in September to 92.3 in October, suggesting that lower petrol prices had left US consumers more willing to spend on other goods.

Economists reacted to the various statistics by forecasting that the US would avoid a feared slide towards recession.

"It's likely that the economy will pick up again next year," said Joseph Trevisani, chief market analyst at New Jersey-based FX Solutions.




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