By Josh Mitchell

WASHINGTON -- Americans spent briskly at retailers in recent months, supporting hopes for a strong holiday shopping season and giving the economy momentum.

Retail sales -- measuring spending at restaurants, clothiers, online stores and other shops -- rose 0.8% in October from the prior month, the Commerce Department said Tuesday. Sales grew 1% in September, revised figures showed, up from a previously reported 0.6% increase.

Those gains marked the best two-month stretch of sales in at least two years.

"The consumer is in very good shape and is poised to continue to lead the economy forward based on rising wages, low unemployment and clean balance sheets," Stephen Stanley, chief economist at AmherstPierpont, said in a note to clients.

Some economists said the outlook of rising consumer spending, a steady labor market and building inflation will nudge the Federal Reserve closer to raising interest rates. Fed policy makers are set to convene once more this year -- Dec. 13-14 -- and have indicated they are inclined to raise rates at that point if signs suggest a steadily improving economy.

Consumer spending accounts for more than two-thirds of economic output in the U.S., and Americans' willingness to shell out more is a big factor behind the economy's rebound in recent months. Economic growth, however, remains sluggish overall this year.

Gross domestic product, the broadest measure of goods and services produced in the U.S., expanded at a 2.9% annual rate in the third quarter after growing at slightly above a 1% pace in the first half of the year. Many economists expect growth of around 2% in the final months of the year.The latest spurt in consumer spending could signal new momentum heading into 2017.

The holiday shopping season is the most crucial part of the year for many retailers' profit margins, and some companies, including Macy's Inc. and Kohl's Corp., have reported improving sales trends and optimism for the holidays.

Tuesday's report showed that strong car sales accounted for much of the bounce in retail sales last month, as well as higher gasoline prices that drove up spending at service stations. But spending grew across a range of items, including construction materials, groceries and health care products. Excluding car purchases, sales rose 0.8%.

Meanwhile, Americans cut spending at furniture stores, department stores and restaurants.

Retail sales have picked up more broadly -- they rose 4.3% in the past 12 months, the best annual gain in almost two years -- due to many factors lifting Americans' confidence and discretionary income. Wages are picking up after years of slow growth, employers continue to hire steadily, gasoline prices remain moderate and the stock market recently hit a record.

Unseasonably warm weather also likely boosted retail traffic in October.

Write to Josh Mitchell at

(END) Dow Jones Newswires

November 15, 2016 10:59 ET (15:59 GMT)

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