Sales at U.S. Retailers Probably Rose for Third Month on Vehicle Purchases

Sales at U.S. Retailers Probably Rose for Third Month on Vehicle Purchases

Retail sales in the U.S. probably increased in September for a third month, easing concern consumer spending will weaken and endanger the recovery, economists said before reports this week.

A projected 0.4 percent gain in sales would match the prior month’s advance and is based on the median estimate of 57 economists surveyed by Bloomberg News before the Commerce Department’s Oct. 15 report and. Other figures may show the trade deficit widened and inflation was contained.

Stores are using promotions to drive sales gains that are being limited by unemployment near a 26-year high. Employers cut more jobs last month than forecast, underscoring concern among some Federal Reserve officials that the economy may require a boost from easier monetary policy.

Retailers continue “to battle a weak labor market and consumer confidence in the doldrums,” said Ellen Zentner, a senior U.S. economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.

The Commerce Department’s report may show purchases excluding automobiles rose 0.3 percent after a 0.6 percent gain in August, according to the survey median.

While retail sales are struggling to accelerate, merchants may be counting on a stronger holiday shopping season. The National Retail Federation is forecasting holiday sales will be the best in four years and companies are planning on stepping up hiring as a result.

Hiring for Holidays

Toys “R” Us Inc., based in Wayne, New Jersey, last week said it would hire about 45,000 seasonal employees, doubling its U.S. workforce, to cope with holiday demand. The increase in seasonal employees is 10,000 more than last year.

Kohl’s Corp., the fourth-largest U.S. department store chain, plans to hire about 40,000 people this holiday season, 21 percent more than last year, the Menomonee Falls, Wisconsin- based company said in a statement last week.

Investors have driven up shares of retailers on signs of improvement. The Standard & Poor’s Supercomposite Retailing Index of 91 retailers including Target Corp. and Macy’s Inc., has gained 14 percent this year, compared with a 4.5 percent increase for the broader S&P 500 gauge.

The Commerce Department’s September figures may also reflect gains in auto sales. Vehicle purchases last month accelerated, with deliveries at General Motors Co. climbed 11 percent from a year earlier to 173,155. Ford Motor Co., the second largest company behind GM, boosted sales by 41 percent to 160,873 sales.

Auto Purchases

Auto purchases rose to a seasonally adjusted 11.73 million annual rate, the strongest performance since the government’s cash-for-clunkers program in August 2009, compared with 11.46 million a month earlier and 9.4 million a year ago, according to industry data.

A lack of job growth and Americans focused on paying down debt are hurdles for retailers.

Employment declined by 95,000 in September, depressed by job losses at local governments, after a 57,000 decrease the previous month, Labor Department figures showed last week. Company payrolls grew 64,000, the fewest in three months, and wages stagnated, the Labor Department’s figures showed Oct. 8.

Limited job growth is hampering spending and confidence. Goldman Sachs Group Inc. chief U.S. economist Jan Hatzius last week told a conference in Washington the jobless rate would drift up to around 10 percent, “maybe a little above 10 percent,” by early next year.

Easier Policy

He also said the Fed would “very likely” take more steps to ease monetary policy at its next policy meeting on Nov. 2-3. He wrote in an Oct. 4 note to clients that the Fed would likely begin by announcing purchases of $500 billion in Treasury and mortgage-backed securities.

The Thomson Reuters/University of Michigan’s preliminary index of consumer sentiment rose to 69 in October from 68.2 at the end of September, according to the Bloomberg survey median before the Oct. 15 release. The gauge averaged 89 in the five years leading up to the recession that began December 2007.

Another report the same day from the Commerce Department may show business inventories rose 0.5 percent in August after a 1 percent gain in July which was the biggest increase in two years, according to the median forecast.

Consumer spending gains and more inventory restocking are leading to increased imports. The trade balance in August widened to $44.1 billion from $42.8 billion, economists surveyed by Bloomberg forecast the Commerce Department to report on Oct. 14.

Discounting by retailers will probably be reflected in a Labor Department report on inflation Oct. 15. Consumer prices rose 0.2 percent in September after a 0.3 percent gain the prior month, according to the median forecast of economists surveyed by Bloomberg. Excluding energy and food, prices rose 0.1 percent after no change.

Prices paid to producers rose 0.2 percent after a 0.4 percent gain, economists estimated the Labor Department will report Oct. 14.

Bloomberg Survey

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Release Period Prior Median
Indicator Date Value Forecast
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Trade Balance $ Blns 10/14 Aug. -42.8 -44.1
PPI MOM% 10/14 Sept. 0.4% 0.2%
Core PPI MOM% 10/14 Sept. 0.1% 0.1%
CPI MOM% 10/15 Sept. 0.3% 0.2%
Core CPI MOM% 10/15 Sept. 0.0% 0.1%
Retail Sales MOM% 10/15 Sept. 0.4% 0.4%
Retail ex-autos MOM% 10/15 Sept. 0.6% 0.3%
Retail exauto/gas MOM% 10/15 Sept. 0.5% 0.3%
U of Mich Conf. Index 10/15 Oct. P 68.2 69.0
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source: bloomberg.com