Retail Sales Probably Increased in March: U.S. Economy Preview

Retail Sales Probably Increased in March: U.S. Economy Preview


April 11 (Bloomberg) -- Sales and confidence probably climbed, manufacturing accelerated and home construction rebounded, making a lasting U.S. expansion more likely, economists said before reports this week.

Retail purchases increased 1.2 percent in March, the biggest gain in four months, according to the median estimate of 65 economists surveyed by Bloomberg News before Commerce Department figures on April 14. Merchants from Target Corp. to Saks Inc. benefitted last month from an early Easter, better weather and a pickup in hiring.

“What we’ve seen in recent months is a broadening of the recovery that, in our view, already makes it self-sustaining,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York. “One of the main reasons consumer spending improved pretty dramatically in the first quarter is simply that income growth is improving.”

The biggest increase in payrolls in three years may be a harbinger of additional gains as employers become more certain sales will grow, which in turn will further lift wages and buying power. Another report this week is projected to show the recovery isn’t stoking inflation, one reason Federal Reserve policy makers will probably keep interest rates low for months.

Auto dealers were among retailers seeing the biggest jump in demand last month as industry data showed car sales rose to an 11.8 million annual pace, the highest rate since August, when the government’s cash-for-clunkers plan was in effect.

Broad-Based Gain

Excluding autos, retail sales probably increased 0.5 percent after a 0.8 percent gain the prior month, according to the survey.

Chain stores last month turned in their best year-over-year performance since 1999, industry figures showed last week. Gap Inc., Saks and TJX Cos. posted March sales gains that exceeded analysts’ estimates as warm weather and improving job prospects encouraged shoppers.

Payrolls increased by 162,000 in March, the third gain in five months, according to figures from the Labor Department. The jobless rate, which hasn’t risen since reaching a 26-year high of 10.1 percent in October, was 9.7 percent for a third month.

Home Depot Inc., the largest U.S. home-improvement retailer, is among companies hiring. The Atlanta-based merchant is adding store jobs for the first time in four years.

“We made a very conscious decision this year to hire,” Chief Executive Officer Frank Blake said in an April 6 interview. “The fourth quarter was more positive than we anticipated.”

Less Pessimism

Households may be feeling less pessimistic as a result. The Reuters/University of Michigan preliminary index of consumer sentiment for April probably rose to 75, the highest level since January 2008, according to the survey median. The figures are due April 16.

Manufacturing, which comprises about 12 percent of the economy, continues to expand. A Fed report April 15 may show production at factories, mines and utilities climbed 0.7 percent in March, the ninth straight gain, after increasing 0.1 percent the previous month, according to the survey.

Reports from the Fed’s district banks in New York and Philadelphia on April 15 are projected to show factories in those regions expanded at a faster pace this month.

Stocks have recovered from a January slump as evidence mounts the economic recovery is broadening. The Standard & Poor’s 500 Index has increased 11 percent since the end of January, climbing on April 9 to the highest level since September 2008.

Bigger Deficit

As demand recovers, imports are on the rise. The trade deficit probably widened to $38.5 billion in February from $37.3 billion the prior month, according to the survey median before an April 13 report from the Commerce Department.

Housing, the industry at the center of the worst recession since the 1930s, may be slow to recover as foreclosures climb.

Builders probably broke ground on 610,000 homes at an annual rate last month, up 6.1 percent from February when blizzards stalled work in parts of the eastern and southern U.S., the survey median showed. The April 16 report may also show building permits, an indicator of future construction, dropped.

President Barack Obama in November extended a tax credit of as much as $8,000 for first-time homebuyers, and expanded it to some current owners in a bid to underpin the market. The extension covers closings through June as long as contracts are signed by the end of April.

Finally, the cost of living in March may have increased 0.1 percent in March after no change the previous month, according to the survey median ahead of the Labor Department’s report on April 14. Excluding food and energy, the so-called core index may have also climbed 0.1 percent, matching the February gain.

The Fed on April 14 will issue its report on regional economic activity, known as the Beige Book, which policy makers use to help formulate monetary policy. Their next interest-rate announcement will be on April 28.



Bloomberg News

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Release Period Prior Median
Indicator Date Value Forecast
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Federal Budget $ Blns 4/12 March -191.6 -62.0
Import Prices MOM% 4/13 March -0.3% 1.0%
Import Prices YOY% 4/13 March 11.2% 11.7%
Trade Balance $ Blns 4/13 Feb. -37.3 -38.5
CPI MOM% 4/14 March 0.0% 0.1%
Core CPI MOM% 4/14 March 0.1% 0.1%
CPI YOY% 4/14 March 2.1% 2.4%
Core CPI YOY% 4/14 March 1.3% 1.2%
Retail Sales MOM% 4/14 March 0.3% 1.2%
Retail ex-autos MOM% 4/14 March 0.8% 0.5%
Retail exauto/gas MOM% 4/14 March 0.9% 0.6%
Business Inv. MOM% 4/14 Feb. 0.0% 0.4%
Initial Claims ,000’s 4/15 10-Apr 460 440
Cont. Claims ,000’s 4/15 3-Apr 4550 4600
Empire Manu. Index 4/15 April 22.9 24.0
Ind. Prod. MOM% 4/15 March 0.1% 0.7%
Cap. Util. % 4/15 March 72.7% 73.3%
Philly Fed Index 4/15 April 18.9 20.0
NAHB Housing Index 4/15 April 15 16
Housing Starts ,000’s 4/16 March 575 610
Building Permits ,000’s 4/16 March 637 627
U of Mich Conf. Index 4/16 April P 73.6 75.0
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source: bloomberg.com