Consumer spending boost for Bush

PRESIDENT George Bush's re-election chances received a boost today from news that Americans splashed out in September at the fastest rate for six months.

Propelled by the largest jump in car purchases in almost three years, retail sales leapt 1.5% - the biggest rise since March and more than double the 0.7% Wall Street had expected. On a year-on-year basis, sales rose 7.7%.

Economists said the bounceback from August's 0.2% fall indicated that consumers were shrugging off record oil prices and feeling more confident about the economy and employment prospects. However, the underlying picture remains one of uncertainty.

Steve Andrew at ISIS Asset Management said: 'These figures come as a relief to those of us who were concerned consumer spending had slowed during the summer. But the stimulus of tax cuts and easy credit has diminished and, going into the fourth quarter, the economy is still sluggish and not emerging from its soft patch with vigour.'

Reinforcing those concerns was a separate report showing a surge in the number of New York State factories complaining of worsening conditions in early October. The closely watched Empire State manufacturing business conditions index plunged from 27.3 in September to 17.4.

Meanwhile, US factory gate prices nudged up 0.1% in September on a hefty energy price drop. While crude oil climbed above $50 a barrel last month, analysts said that probably came too late to be reflected in the prices.