Retail Sales, Production Probably Climbed: U.S. Economy Preview

Retail Sales, Production Probably Climbed: U.S. Economy Preview


Jan. 10 (Bloomberg) -- Consumers probably took advantage of holiday discounts in December and manufacturers churned out more goods, pointing to a U.S. economy poised to sustain the expansion into 2010, economists said before reports this week.

Sales at retailers rose 0.5 percent last month, the third consecutive increase, according to the median forecast of 57 economists surveyed by Bloomberg News ahead of Commerce Department figures due Jan. 14. The nation’s factories, mines and utilities increased production by 0.6 percent, another report may show.

A 10 percent unemployment rate and additional job losses prompted Americans to stretch their buying power last month, benefiting discounters such as TJX Cos. and Sears Holdings Corp.’s Kmart division. Combined with improving demand from overseas and the need to replenish depleted stockpiles, gains in manufacturing will probably help the economy keep growing.

“The holiday shopping season was better than expected,” said Julia Coronado, a senior economist at BNP Paribas in New York. “Production is ramping up, trade is growing fairly rapidly and the consumer has returned to spending.”

Auto dealers were among the merchants with reason to cheer last month. Vehicles sales climbed in December for a third consecutive month, defying forecasts that the expiration in August of government incentives to trade in older models for more fuel-efficient vehicles would cause buyers to retreat.

Broad-Based Gains

Excluding automobiles, sales probably rose 0.3 percent, the fourth increase in the last five months, according to the survey median.

A surge of online shopping and discount hunting after the East Coast snowstorm snarled sales the weekend before Christmas lifted December comparable-store sales 3 percent, the biggest gain since April 2008, Retail Metrics said Jan. 7.

“We believe consumers will remain focused on value as the economy improves,” Carol Meyrowitz, chief executive officer of TJX, said Jan. 7 after the operator of T.J. Maxx and other low- priced apparel retailers reported December sales were up 21 percent over the same period a year earlier.

Sears, the largest U.S. department-store chain, last week issued a fourth-quarter profit forecast that exceeded analysts’ estimates. December sales at stores open at least a year rose 0.4 percent companywide, helped by a 5.3 percent increase at its Kmart division that reflected improving demand for toys, clothing and home goods.

Payrolls Fall

Last week’s unemployment report serves as a reminder that the labor market has yet to recover in step with the economy. The U.S. lost 85,000 jobs in December and the unemployment rate held at 10 percent for a second month, the figures showed. Joblessness reached a 26-year high of 10.1 percent in October.

Improving global sales and lean inventories are prompting manufacturers such as Caterpillar Inc. to speed up assembly lines. Industrial production expanded in December after increasing 0.8 percent the month before, according to the median forecast before the Jan. 15 release from the Federal Reserve.

As the economy recovered, the Standard & Poor’s 500 Index rose 0.5 percent in December, capping a 23 percent gain for all of 2009. The gains continued in 2010, with the index rising 2.7 percent last week.

Gains in consumer spending and business investment in inventories and new equipment probably also caused imports to rise, economists project a Jan. 12 report from the Commerce Department will show. The trade gap in November probably widened to $34.6 billion from $32.9 billion the prior month, according to the survey median.

Consumers may also be turning more confident. The Reuters/University of Michigan preliminary sentiment index for January, due Jan. 15, probably rose to 74, the highest level in two years, the survey showed.

Consumer prices in December probably climbed 0.2 percent in December, the smallest increase in three months, according to economists surveyed before a Labor Department report on Jan. 15. Excluding food and energy, prices probably rose 0.1 percent after no change, showing price pressures are muted.



Bloomberg Survey

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Release Period Prior Median
Indicator Date Value Forecast
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Trade Balance $ Blns 1/12 Nov. -32.9 -34.6
Federal Budget $ Blns 1/13 Dec. -51.8 -92.0
Retail Sales MOM% 1/14 Dec. 1.3% 0.5%
Retail ex-autos MOM% 1/14 Dec. 1.2% 0.3%
Initial Claims ,000’s 1/14 9-Jan 434 435
Cont. Claims ,000’s 1/14 2-Jan 4802 4750
Import Prices MOM% 1/14 Dec. 1.7% 0.0%
Import Prices YOY% 1/14 Dec. 3.7% 8.6%
Business Inv. MOM% 1/14 Nov. 0.2% 0.2%
CPI MOM% 1/15 Dec. 0.4% 0.2%
Core CPI MOM% 1/15 Dec. 0.0% 0.1%
CPI YOY% 1/15 Dec. 1.8% 2.8%
Core CPI YOY% 1/15 Dec. 1.7% 1.8%
Empire Manu. Index 1/15 Jan. 2.6 12.0
Ind. Prod. MOM% 1/15 Dec. 0.8% 0.6%
Cap. Util. % 1/15 Dec. 71.3% 71.7%
U of Mich Conf. Index 1/15 Jan. P 72.5 74.0
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