A GAUGE of U.S. consumer spending rose solidly in November, suggesting enough momentum in the economy for the Federal Reserve to raise interest rates this week for the first time in nearly a decade.

    Other data showed Friday that consumer sentiment nudged up in early December, an encouraging sign for future spending.

    Retail sales excluding automobiles, gasoline, building materials and food services increased 0.6 percent after gaining 0.2 percent in October, the Commerce Department said. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

    “It dismisses any concerns of a potential slump in household spending after a couple of weaker months in August and September. Not that there is much doubt any more, but this supports the case for a rate hike by the Fed next week,” Steve Murphy, U.S. economist at Capital Economics in Toronto, said Friday.

    Consumer spending, which accounts for more than two-thirds of U.S. economic activity, surprisingly slowed in the last few months. The moderation came despite a tightening labor market, which has started to lift household income.

    Separately, the University of Michigan’s consumer sentiment index rose to 91.8 early this month from a reading of 91.3 in November.

    The latest signs of strength in consumption prompted economists at Barclays to bump up their fourth-quarter growth estimate by one-tenth of a percentage point to a 1.8 percent annual rate. The economy grew at a 2.1 percent pace in the third quarter.

    In another report, the Commerce Department said retail inventories excluding autos increased 0.4 percent in October, suggesting inventories could be less of a drag on fourth-quarter growth than previously thought. That, however, implies inventories could weigh on output in early 2016.

    Solid domestic demand in November supports expectations that the Fed will raise its benchmark overnight interest rate from near zero when policymakers conclude a two-day meeting this Wednesday, despite weak inflation.

    The U.S. central bank has not raised rates since June 2006.

    (SD-Agencies)