WASHINGTON (AFP) - Shoppers -- the dynamo in the US economy -- shrugged off rising energy prices and splurged in malls and car showrooms in September, a government report showed.
Consumers boosted retail sales by 1.5 percent in the month, the Commerce Department said, double most economists' modest predictions even as crude oil prices hit a record high.
It was the steepest gain in sales since March and an encouraging sign for the economy, likely to be welcome news to President George W. Bush in his battle with Democrat John Kerry over economic policy.
The US presidential election is November 2.
The boom was sparked by a 4.2-percent surge in automobile sales in the month, the steepest gain since October 2001, as dealers lured consumers with financial incentives.
Hurricanes, too, may have spurred buying, analysts said.
"You can't keep people out of the stores, especially when they need to shore up their homes in the face of hurricanes," said Joel Naroff, president of Naroff Economic Advisors.
Just over one-quarter of the retail sales outside of the vehicle sector came from a 1.4-percent surge in sales of building material and garden equipment, he noted.
"How long people can continue to keep on spending at this pace is unclear. Clearly, we need some more jobs to generate needed income. But for now, the economy looks to be in decent shape," Naroff said.
Compared to last year, retail sales were up 7.7 percent.
A further breakdown of sales showed:
-- Clothing sales rose 0.8 percent, a sign of the start of the winter shopping season; general merchandise stores, including department stores, reported a 0.9 percent rise in sales; and restaurants and bars enjoyed a 0.7 percent rise in sales.
-- But sales of furniture and home furnishings slipped 0.4 percent; and sporting goods, hobby, music and book stores also suffered a 0.4-percent sales dip.
"There was much stronger than expected spending in September, which is surprising given the fact gasoline and heating oil prices are soaring," said BMO Financial Group economist Sal Guatieri.
"We thought there would be much more of a depressing impact on spending from higher energy costs."
New York's main contract, light sweet crude for delivery in November, shot to an unprecedented 55 dollars a barrel before closing at a record settlement of 54.93, up 17 cents on the day.
A separate report indicated consumer sentiment is now flagging, however, in the face of the oil price gains and a still-tepid employment market.
The University of Michigan's consumer sentiment index, based on a survey, slumped to 87.5 points -- the lowest since April 2003, when US troops were entering Baghdad -- from 94.2 late September.
Industrial production, meanwhile, appeared to have taken a hammering from hurricanes.
Factories, mines and utilities raised total combined production by a seasonally adjusted 0.1 percent, much weaker than the 0.3 percent gain widely anticipated by analysts.
The result reversed a 0.1-percent decline in August.
Hurricanes battering the country forced manufacturers to lower output 0.3 percent and mining industries, including oil extractors, to slash production 2.3 percent.
But utilities, enjoying stronger power demand for air conditioning as the weather warmed up in September after an unseasonably cool August, boosted output 5.5 percent.
"Although total industrial production increased slightly in September, hurricane disaster preparation and damage clearly disrupted manufacturing production activity," said Manufacturers Alliance/MAPI chief economist Daniel Meckstroth.
"In a relatively young economic expansion, however, random negative losses in manufacturing are generally made up in the months ahead. A recent survey of our members continues to indicate widespread growth in manufacturing orders which provide incentive to get production growing again."