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Ahead of the Bell: US Retail Sales

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October 29, 2013 07:54 AM EST | AP

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WASHINGTON (AP) — The U.S. Commerce Department reports Tuesday on sales at retail chains and restaurants in September. Report to be released at 8:30 am EDT.

SLIGHT INCREASE: Economists forecast that retail sales rose 0.1 percent in September, according to a survey by FactSet. That would be lower than August's 0.2 percent gain.

CAUTIOUS CONSUMERS: Americans have increased their spending this year, but in recent months have grown more cautious. The August retail sales gain was the smallest increase in four months.

In the past year, consumers have focused their spending on big-ticket purchases, such as autos, furniture and building supplies. Online and catalog sales have also jumped. But Americans have spent less on other retail goods, such as clothing, electronics and sporting goods.

The September report will offer some insight into consumers' mood ahead of the 16-day partial government shutdown.

SLOWER HIRING HITS CONFIDENCE: Retail sales are closely watched because they're the government's first report each month on consumer spending, which accounts for 70 percent of U.S. economic activity.

Weaker job growth and minuscule pay raises have made consumers less confident in the economy. That's also made them less inclined to open their wallets.

Employers added an average of just 143,000 jobs a month from July through September. That's down from 182,000 a month from April through June and 207,000 in the first three months of the year.

Consumer confidence fell last month to a four-month low, according to the Conference Board. In addition to a weaker job market, higher interest rates and a drop in stock prices may have also weighed on Americans' outlook, economists said.

The Conference Board will release the October consumer confidence report on Tuesday, as well. Economists expect it will fall even further, reflecting concerns last month about the government shutdown.

Sales at retail stores open at least a year rose just 2 percent in September, according to a tally of 10 retail chains by the International Council of Shopping Centers. That is down from a 3.5 percent pace in August.

And auto sales fell 5 percent in September, according to the automakers. That was mostly because of a calendar quirk that pulled Labor Day weekend sales into August. Still, the decline is likely to push down sales by auto dealers in the retail sales report, though the drop will likely be temporary. Auto sales have been healthy all year.

Sluggish spending is likely to weigh on growth. Most economists predict growth slowed in the July-September quarter to an annual rate of about 1.5 percent to 2 percent, down from a 2.5 percent rate in the April-June quarter. And the shutdown is likely to keep growth at a sluggish pace for the final three months of the year.

The retail sales report was delayed by the shutdown. It was originally scheduled to be released Oct. 11.