WASHINGTON — The September U.S. retail sales data were weak and set up a government-damaged Q4 for additional slowing, while September producer price data showed little change overall as falling food costs offset higher auto pricing.

September retail sales fell 0.1% overall in their worst showing since a 0.3% drop in March. Sales were up 0.4% ex autos, and rose 0.4% ex autos and gas.

Autos & parts dealers posted a 2.2% decline, but clothing at a 0.5% drop and flat gasoline sales also contributed to weakness. Building materials eked out a 0.1% gain, while food, healthcare, electronics and furniture were sources of relative strength.

Remarkably, restaurant sales were up 0.9% during a month when other sales were weak.

Most important is that Q3 ended on a weak note before the government closed. Overall Q3 core sales were better, however, as ex auto, gas and building materials were up 0.5% in September.

Sales are 3.2% higher year-to-year, suggesting real economic growth remains in the plus-2% area.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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