Sales, Production, Housing Probably Rose: U.S. Economy Preview

Sales, Production, Housing Probably Rose: U.S. Economy Preview


Nov. 15 (Bloomberg) -- Retail sales probably rebounded in October, production climbed and work began on more houses, allaying concern the U.S. expansion will unravel without the government’s help, economists said before reports this week.

Purchases rose 0.9 percent after dropping 1.5 percent in September, according to the median of 66 estimates in a Bloomberg News survey ahead of Commerce Department data tomorrow. Output rose for a fourth month and housing starts reached the highest level in a year, other figures may show.

Auto dealers last month saw demand improve even after the administration’s trade-in incentive expired, while the increase in construction showed builders weren’t deterred by the possible end of the first-time buyer credit. Rising exports to expanding economies in Asia and Europe may also spur increases in manufacturing, maintaining the pickup into 2010.

“The recovery seems increasingly sustainable,” Richard Berner, co-head of global economics for Morgan Stanley in New York, said in a report to clients. “Incoming data for consumer spending has been significantly stronger than expected.”

Auto demand is stabilizing after plunging to a three- decade low earlier this year. General Motors Co. and Ford Motor Co. last month had their first combined sales gain in three years, helping the industry rebound from a plunge in September.

The retail report may also show that excluding autos, sales rose 0.4 percent, according to the survey median.

Non-Auto Sales

Sales at stores open at least a year climbed last month from a year earlier at Framingham, Massachusetts-based TJX Cos., owner of T.J. Maxx and Marshalls stores that sell designer goods at discounted prices. Luxury chains Saks Inc. and Nordstrom Inc. also had gains.

The Standard & Poor’s 500 Retailing Index, which includes companies from Home Depot Inc. to Gap Inc. and Target Corp., has jumped 77 percent since March 9, outpacing gains in the S&P 500 gauge, which is up 62 percent from the 12-year low reached that day.

Wal-Mart Stores Inc., the world’s largest retailer, raised its annual profit forecast while predicting U.S. sales may be little changed this quarter.

“I continue to be encouraged by both our traffic and market-share gains,” Mike Duke, chief executive officer of the Bentonville, Arkansas-based company, said on a pre-recorded conference call last week.

The Conference Board’s index of leading economic indicators rose in October for a seventh straight month, economists said ahead of a report on Nov. 19.

Factory Rebound

The recovery is driven in large part by manufacturing, which accounts for about 12 percent of the economy. Industrial production, due from the Federal Reserve on Nov. 17, grew 0.4 percent in October, according to the Bloomberg survey. The proportion of plant capacity in use probably also increased.

Regional Fed reports will reinforce the improvement. Data from the New York Fed tomorrow may show manufacturing in the region expanded in November for the fourth consecutive month. A similar report from the Fed Bank of Philadelphia, due Nov. 19, is forecast to show factories accelerated this month.

A tax credit of as much as $8,000 for first-time homebuyers has helped pull housing out of its worst slump since the Great Depression. The incentive, due to expire at the end of this month, was extended to April 30 and expanded to include some current owners.

Builders broke ground on homes at a 600,000 annual pace in October, according to the median estimate of economists surveyed before the Nov. 18 Commerce Department report. Permits, a sign of future construction, also probably rose.

Residential Builders

A report from the National Association of Home Builders/Wells Fargo a day earlier may show an index of builder confidence increased, according to the survey median.

In coming months, gains in consumer spending may be restrained by rising unemployment, which reached a 26-year high last month and is expected to stay above 10 percent through the first half of 2010, a Bloomberg said earlier this month showed.

Mounting joblessness and idle factory capacity is helping tame inflation, Labor Department reports may show. The cost of living index, due on Nov. 18, rose 0.2 percent in October for a second month, according to the Bloomberg survey median. The index of wholesale prices, to be released a day earlier, may have climbed 0.5 percent last month.



Bloomberg Survey

===============================================================
Release Period Prior Median
Indicator Date Value Forecast
===============================================================
Retail Sales MOM% 11/16 Oct. -1.5% 0.9%
Retail ex-autos MOM% 11/16 Oct. 0.5% 0.4%
Empire Manu. Index 11/16 Nov. 34.6 30.0
Business Inv. MOM% 11/16 Sept. -1.5% -0.7%
PPI MOM% 11/17 Oct. -0.6% 0.5%
Core PPI MOM% 11/17 Oct. -0.1% 0.1%
PPI YOY% 11/17 Oct. -4.8% -1.8%
Core PPI YOY% 11/17 Oct. 1.8% 1.4%
Net Long Term TICS $ Bl 11/17 Sept. 28.6 30.0
Total TICS $ Blns 11/17 Sept. 10.2 40.0
Ind. Prod. MOM% 11/17 Oct. 0.7% 0.4%
Cap. Util. % 11/17 Oct. 70.5% 70.8%
NAHB Housing Index 11/17 Nov. 18 19
CPI MOM% 11/18 Oct. 0.2% 0.2%
Core CPI MOM% 11/18 Oct. 0.2% 0.1%
CPI YOY% 11/18 Oct. -1.3% -0.3%
Core CPI YOY% 11/18 Oct. 1.5% 1.6%
Core CPI SA Index 11/18 Oct. 220.053 220.273
CPI NSA Index 11/18 Oct. 215.969 216.045
Housing Starts ,000’s 11/18 Oct. 590 600
Building Permits ,000’s 11/18 Oct. 575 580
Initial Claims ,000’s 11/19 14-Nov 502 505
Cont. Claims ,000’s 11/19 7-Nov 5631 5598
LEI MOM% 11/19 Oct. 1.0% 0.4%
Philly Fed Index 11/19 Nov. 11.5 12.0


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