Retail Sales Probably Rose in January as Promotions Enticed U.S. Shoppers
Retail sales probably climbed in January as shoppers took advantage of post-holiday promotions before winter storms covered much of the U.S., a sign the economy is on the mend, economists said before a report this week.
The projected 0.5 percent in purchases gain would follow a 0.6 percent December increase, according to the median forecast of 62 economists surveyed by Bloomberg News ahead of Commerce Department figures Feb. 15. Manufacturing expanded, prices were contained, and housing was depressed, other data may show.
Retailers like Gap Inc., Limited Brands Inc. and Macy’s Inc. topped analysts’ estimates for January sales, reinforcing forecasts that household spending, which accounts for about 70 percent of the economy, will keep growing. Even so, the Federal Reserve may complete a second round of monetary stimulus worth $600 billion aimed at spurring growth and cutting unemployment.
“The recovery is becoming more broad-based,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “The Fed is right to pursue its current policy,” he said, because “the improvement in the labor market has been pretty anemic.”
Promotions and clearance items drew customers, helping retailers ring up sales early in the month before snowy weather slowed shopping in the last two weeks, according to David Bassuk, head of the global retail practice at consultant AlixPartners in New York. Winter storms spread from the Midwest and the South to New England, covering 71 percent of the country with snow on Jan. 12, according to the National Climatic Data Center.
Topping Estimate
Sales at stores open at least a year at the more than 30 chains tracked by Retail Metrics climbed 4.4 percent in January for a 17th straight gain, surpassing its estimate of a 2.6 percent increase.
Gap, a clothing retailer based in San Francisco, benefited from higher same-store sales at its Banana Republic stores, while the Victoria’s Secret lingerie chain fueled results at Columbus, Ohio-based Limited. Department store Macy’s sales capped a year of “remarkable achievement in a period of economic uncertainty,” Chief Executive Officer Terry Lundgren said in a Feb. 3 statement.
Investors have driven up retailer shares as spending increases. The Standard & Poor’s Supercomposite Retailing Index, which includes Macy’s and Gap, has gained 34 percent in the 12 months through Feb. 11, compared with a 23 percent advance for the broader S&P 500.
Bernanke’s View
Fed Chairman Ben S. Bernanke and fellow policy makers are awaiting further proof of a durable pickup in the labor market that will lift growth. Minutes of their January meeting, due on Feb. 16, may shed further light on their concerns.
“With output growth likely to be moderate for a while and with employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level,” Bernanke told the House Budget Committee on Feb. 9.
The labor market may take time to rebound. While unemployment fell to 9 percent in January, from 9.4 percent in December, it has been 9 percent or higher since May 2009, the longest period of elevated joblessness since monthly records began in 1948.
Inflation may “persist below the levels that Fed policy makers have judged to be consistent” with their long term goal, Bernanke also told legislators last week.
Inflation Measures
Three price reports from the Labor Department this week may indicate that even with rising costs for commodities such as fuel and food, the Fed has room to maintain quantitative easing.
The cost of living index, the broadest of the three measures because it includes good and services, rose 0.3 percent in January after rising 0.5 percent the prior month, according to the Bloomberg survey median ahead of the Feb. 17 report. So- called core prices, which exclude food and fuel, were likely up 0.1 percent for a third month.
Other reports may confirm that manufacturing is driving the economic rebound. Fed figures on Feb. 16 may show production at factories, mines and utilities rose 0.5 percent in January, economists projected. The Philadelphia Fed’s general economic gauge and the New York Fed’s Empire State manufacturing index will likely post gains.
Homebuilding remains constrained by competition from foreclosures and falling prices, Commerce Department data may show on Feb. 16. Housing starts grew 1.7 percent in January from a one-year low, economists projected. Permits, a proxy for future construction, may have slumped last month after builders rushed to get approval in December before changes in building codes took effect at the beginning of 2011.
Rounding out the week, the Conference Board’s leading indicators gauge due on Feb. 17 may show the economy will continue to expand, the survey median showed.
Bloomberg Survey
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Release Period Prior Median
Indicator Date Value Forecast
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Empire Manu. Index 2/15 Feb. 11.9 15.0
Import Prices MOM% 2/15 Jan. 1.1% 0.8%
Import Prices YOY% 2/15 Jan. 4.8% 4.4%
Retail Sales MOM% 2/15 Jan. 0.6% 0.5%
Retail ex-autos MOM% 2/15 Jan. 0.5% 0.5%
Retail exauto/gas MOM% 2/15 Jan. 0.6% 0.4%
Business Inv. MOM% 2/15 Dec. 0.2% 0.7%
NAHB Housing Index 2/15 Feb. 16 16
PPI MOM% 2/16 Jan. 1.1% 0.8%
Core PPI MOM% 2/16 Jan. 0.2% 0.2%
PPI YOY% 2/16 Jan. 4.0% 3.5%
Core PPI YOY% 2/16 Jan. 1.3% 1.2%
Housing Starts ,000’s 2/16 Jan. 529 538
Housing Starts MOM% 2/16 Jan. -4.3% 1.7%
Building Permits ,000’s 2/16 Jan. 627 565
Building Permits MOM% 2/16 Jan. 15.3% -9.9%
Ind. Prod. MOM% 2/16 Jan. 0.8% 0.5%
Cap. Util. % 2/16 Jan. 76.0% 76.4%
CPI MOM% 2/17 Jan. 0.5% 0.3%
Core CPI MOM% 2/17 Jan. 0.1% 0.1%
CPI YOY% 2/17 Jan. 1.5% 1.6%
Core CPI YOY% 2/17 Jan. 0.8% 0.9%
Core CPI SA Index 2/17 Jan. 222.187 222.473
CPI NSA Index 2/17 Jan. 219.179 220.100
Initial Claims ,000’s 2/17 12-Feb 383 400
Cont. Claims ,000’s 2/17 5-Feb 3888 3895
LEI MOM% 2/17 Jan. 1.0% 0.3%
Philly Fed Index 2/17 Feb. 19.3 21.0
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source: bloomberg.com
