Retail sales increase 0.1 in August
Core retail sales rise 0.3; July sales revised up
Manufacturing production rebounds 0.9
Business inventories increase 0.4

WASHINGTON, Sept 17 Reuters U.S. retail sales unexpectedly rose in August as a decline in receipts at auto dealerships was more than offset by strength in online purchases, suggesting that the economy remained on solid footing through much of the third quarter.

The report from the Commerce Department on Tuesday also showed retail sales were a bit stronger than initially thought in July. It combined with the decline in the unemployment rate last month to push against financial market expectations for a halfpercentagepoint interest rate cut from the Federal Reserve on Wednesday. U.S. central bank officials started a twoday policy meeting on Tuesday.

The Atlanta Fed raised its thirdquarter GDP growth estimate to a 3.0 annualized rate from a 2.5 pace after the data. The economy grew at a 3.0 pace in the second quarter.

There does not appear to be any reason for Fed officials to start out with a larger 50 basis points rate cut because whatever stress there is in the labor market, it isn39;t translating into weaker economic demand, said Christopher Rupkey, chief economist at FWDBONDS. If this is an economy on the brink of recession, consumers certainly don39;t see it.

Retail sales increased 0.1 last month after an upwardly revised 1.1 surge in July, the Commerce Department39;s Census Bureau said. Economists…