Buoyancy returns to American retail sales

US retail sales surged at their fastest monthly rate in 10 years of record keeping last month, in a sign that consumers are regaining confidence after the 11 September terrorist attacks.

Interest-free deals on new cars saw total retail sales surge 7.1 per cent last month, the US Commerce Department said. Analysts had expected a rise of only 2.7 per cent. Sales excluding cars were up 1.0 per cent, against forecasts of just 0.2 per cent. During September, the figure was down 2.2 per cent.

The rise in new car sales of 26.4 per cent was the biggest monthly gain on record, taking motor sales to an all-time monthly high of $87.4bn (£60.7bn). Some economists cautioned against taking too much cheer from the data given that the financing deals being offered by motor manufacturers were far from usual.

Trade also boomed at department and discount stores, helping to send clothing sales 6.9 per cent higher at $14.9bn. Overall, retail sales stood at $306.83bn in the period, a year-on-year rise of 7.5 per cent.

The Commerce Department changed the way it calculates retail sales in 1992, and, using existing methods, the October rise was a 31-year record.

US stocks rallied on the data, with the Dow Jones Industrial Average climbing as much as 107.7 points to 9,858.69, shortly after the market opened, before easing back amid concerns over the employment outlook.