Retail Sales Probably Climbed in April: U.S. Economy Preview
Sales at U.S. retailers probably climbed in April, reinforcing evidence that employment gains are allowing Americans to weather higher fuel costs, economists said before reports this week.
The projected 0.6 percent gain in purchases would follow a 0.4 percent increase in March, according to the median forecast in a Bloomberg News survey ahead of Commerce Department figures May 12. Another report may show the cost of living increased.
Demand at chains including Limited Brands Inc. and Macy’s Inc. (M) topped analysts’ estimates last month as payrolls nationally increased more than projected. While mounting fuel and food costs are pinching household budgets, improving job prospects mean consumer spending, which accounts for about 70 percent of the economy, can keep growing.
“We’re seeing a pretty resilient consumer, even with the headwinds from higher fuel prices,” said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut. “What’s driving this is the pickup in employment. The labor market will continue to improve and sustain consumer spending.”
The retail sales figures, which aren’t adjusted for inflation, probably got a boost from receipts at service stations that reflected higher gasoline costs. Regular fuel averaged $3.81 a gallon in April, up from $3.54 the prior month. The price reached $3.99 on May 4, the highest since July 2008, according to AAA, the nation’s biggest motoring organization.
Payrolls grew by 244,000 last month, the seventh straight monthly gain, after increasing a revised 221,000 the prior month, the Labor Department reported on May 6. Nonetheless, the jobless rate climbed to 9 percent, the first increase since November, a separate survey of households showed.
Same-Store Sales
More hiring helps explain the better-than-forecast retailer results for April. Sales at stores open at least a year rose 8.7 percent from the same month last year, the 20th straight gain, a report from Retail Metrics Inc. showed last week.
Limited, the Columbus, Ohio-based operator of Victoria’s Secret, reported a 20 percent jump in same-store sales, almost double the average estimate of analysts compiled by Retail Metrics, which tracks more than two dozen U.S. chains. Sales at Cincinnati-based Macy’s, the second-largest U.S. department store chain, rose 10.8 percent, also surpassing projections.
The Standard & Poor’s Supercomposite Retailing Index has risen 3.7 percent from the end of March through May 6, outpacing the broader S&P 500, which advanced 1.1 percent.
Autos, Gasoline
The retail report may also show sales excluding automobiles and service stations rose 0.5 percent last month after rising 0.6 percent in March, economists said.
Industrywide light-vehicle sales ran at a seasonally adjusted annual rate of 13.2 million in April, topping the 13 million pace for the third straight month, according to researcher Autodata Corp. Detroit-based General Motors Co. (GM)’s U.S. deliveries jumped 26 percent, while Dearborn, Michigan- based Ford Motor Co. (F) had a 13 percent gain.
“We continue to believe that the economy will stay on the current steady recovery course,” Don Johnson, GM’s vice president of U.S. sales operations, said on a May 3 conference call.
Labor Department figures due May 13 may show the cost of living index rose 0.4 percent in April after a 0.5 percent gain the prior month, and was up 3.1 percent from April 2010, according to the Bloomberg survey median. Core prices, which exclude volatile food and fuel, may have climbed 0.2 percent in April from a month earlier.
The consumer-price index is the broadest of three monthly price gauges the Labor Department releases. Figures earlier in the week may show wholesale prices and the cost of goods imported into the U.S. also rose in April.
Confidence Stagnant
Bigger grocery and fuel bills are limiting confidence. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 70 in May from 69.8 in April, according to the Bloomberg survey median ahead of the May 13 report.
Federal Reserve Chairman Ben S. Bernanke and his chief deputies have said in recent speeches that the threat from accelerating prices will prove “transitory.”
“The broader economy is in a moderate recovery, and we have recently seen some welcome, if gradual, improvement in the labor market,” Bernanke said in an April 29 speech in Arlington, Virginia.
Also this week, Commerce Department figures may show the trade deficit widened in March from the prior month, reflecting costlier oil imports, according to the Bloomberg survey median.
Bloomberg Survey
==============================================================
Release Period Prior Median
Indicator Date Value Forecast
==============================================================
Import Prices MOM% 5/10 April 2.7% 1.8%
Trade Balance $ Blns 5/11 March -45.8 -47.0
Retail Sales MOM% 5/12 April 0.4% 0.6%
Retail ex-autos MOM% 5/12 April 0.8% 0.6%
Retail exauto/gas MOM% 5/12 April 0.6% 0.5%
PPI MOM% 5/12 April 0.7% 0.6%
Core PPI MOM% 5/12 April 0.3% 0.2%
PPI YOY% 5/12 April 5.8% 6.5%
Core PPI YOY% 5/12 April 1.9% 2.1%
Initial Claims ,000’s 5/12 7-May 474 428
CPI MOM% 5/13 April 0.5% 0.4%
Core CPI MOM% 5/13 April 0.1% 0.2%
CPI YOY% 5/13 April 2.7% 3.1%
Core CPI YOY% 5/13 April 1.2% 1.3%
U of Mich Conf. Index 5/13 May P 69.8 70.0
==============================================================
source: bloomberg.com
