WASHINGTON (AFP) - Shoppers, the driving force of the US economy, splashed out with unexpected vigor in October as the job market showed signs of a revival, a government report showed.
Retail sales in October advanced 0.2 percent from September, after adjusting for seasonal variations, the Commerce Department said.
The performance was held back by a 2.2-percent plunge in automobile and parts sales.
Stripping out automobile and parts sales, however, retail sales surged by 0.9 percent.
The strength of retail sales surprised Wall Street analysts, who had tipped a gain of 0.1 percent in overall retail sales and a gain of 0.6 percent without counting automobiles.
Wall Street's broad-market index, the Standard and Poor's 500 index, advanced 10.69 points, or 0.91 percent, to 1,184.17, the highest level since before the September 11, 2001 terrorist attacks.
"Consumers are spending money, there is little doubt about that," said Joel Naroff, president of Naroff Economic Advisors.
"To keep that up, they needed an infusion of cash, and the only way they were going to get it was through more jobs. That just may be happening. The only dark cloud remains the high cost of energy."
The US labor market appeared to escape a quagmire in October, churning out a seven-month record of 337,000 jobs.
Consumer sentiment appeared to be brightening, too.
A survey-based barometer of sentiment compiled by the University of Michigan rose in early November to a three-month high of 95.5 points -- stronger than expected by analysts -- from 91.7 in October.
Sentiment is closely monitored because consumer spending accounts for two-thirds of US economic activity.
A breakdown of the October retail sales data showed:
-- The sharpest gains were at gasoline stations, where sales, pumped up by high prices, soared 4.3 percent, and at clothes stores, where sales jumped 3.0 percent as winter closed in.
-- Sales rose 1.0 percent for restaurants and bars, 0.9 percent for general merchandise stores, 0.5 percent for health and personal care stores, 0.4 percent for food and drink stores and 0.3 percent for furniture.
-- Building material and garden stores, however, suffered a 1.1 percent plunge in sales, while electronic and appliance stores lost 0.1 percent in sales.
-- Sales were flat for sporting goods stores.
-- Internet and mail order retailers gained 0.8 percent.
"Higher prices at the pump contributed significantly to the gain but were not the only story," said Wachovia economist Gina Martin.
"Consumers continued to exercise their shopping muscle," she said.
Core sales -- excluding autos and gasoline -- were up 0.5 percent in October, she said.
"Many analysts feared average gasoline prices above 2.00 dollars per gallon would scare consumers away from shopping centers this fall. At least so far, this is clearly not the case," Martin said.
"Consumers did indeed spend 4.3 percent more at gasoline stations in October, but the remainder of today's report showed strength in other categories of spending, as well."
Higher wages were paying for the shopping spree, she said.
"Consumers are able to continue exceeding expectations because the job market is getting better and their wages and salaries are growing. Much has been made about the slowing in disposable income gains as tax benefits wane. However, little notice has been paid to the fact that wages and salaries have increased steadily."
Merrill Lynch chief North American economist David Rosenberg said the retail sales figures were relatively soft, however, once the impact of higher gasoline prices was removed.
The automobile sector was patchy, he said.
"The on-again, off-again incentive-driven auto sector continues to post a see-saw pattern with sales down 2.2 percent last month after a 4.3 percent spurt in September," Rosenberg said.
"The motor vehicle segment has not been able to put up back-to-back gains in seven months."

11/12/2004 - 23:16 GMT - AFP