US retail sales rebounded in September at their fastest pace in seven months as consumers shook off some of their concerns about stock market drops and political gridlock, potentially giving new momentum to the weak economic recovery.

Sales rose 1.1 per cent from a month earlier, boosted by strong car purchases, the Commerce Department said today. The reading beat the median forecast in a Reuters poll for a 0.7 per cent rise. Sales growth during August was revised upward to 0.3 per cent.

Consumer spending accounts for about two thirds of US economic activity, and the Commerce Department data suggests growth at the end of the third quarter might have been stronger than previously thought.

Excluding motor vehicles, sales increased 0.6 per cent in September, above forecasts for a 0.3 per cent gain.

Sales of motor vehicles and parts rose 3.6 per cent, the biggest gain since March 2010. That increase - along with higher sales of furniture, gasoline and electronics - made up for lower grocery store and building material sales. Spending at restaurants and bars also rose.

Consumer confidence rebounded modestly in September after dipping in early August to its lowest in more than three decades.

Confidence sank deeply over the summer when a bruising battle over the US budget slammed stock prices and pushed the nation to the brink of default. Even with September's modest improvement, Americans were still more worried about the economy's outlook than at any point since 1980. The Thomson Reuters/University of Michigan's preliminary consumer sentiment survey for October will be released later today and is expected to creep higher.

Stripping out sales of petrol, cars and building materials, so-called core retail sales rose 0.6 per cent in September.

Reuters