US spending rises as consumers snap up iPhones, but car sales dip

WASHINGTON (REUTERS) - A gauge of US consumer spending rose last month, as Americans likely snapped up Apple's new iPhone and bought leisure goods, but falling sales of cars pointed to sluggish economic growth during the third quarter.

The Commerce Department said on Tuesday retail sales, excluding cars, petrol and building materials, increased 0.5 per cent last month after a 0.2 per cent gain in August. The so-called core sales correspond most closely with the consumer spending component of gross domestic product. Core sales last month were boosted by a 0.7 per cent advance in receipts at electronics and appliance stores.

The increase last month probably reflected sales of Apple's new iPhone. Those sales likely boosted receipts at non-store retailers, mostly Internet sites, which increased 0.4 per cent last month. Apple said it sold 33.8 million iPhones in the September quarter.

While Americans bought smartphones, they cut back on car purchases, with sales at auto dealers falling 2.2 per cent, the biggest drop since October last year. That pushed down overall retail sales, which fell 0.1 per cent last month. It was the first decline since March and followed a 0.2 per cent gain in August. Economists had expected retail sales to edge up 0.1 per cent last month.