Retail Sales in U.S. Probably Rose, Sparked by Auto Bargains

By Bob Willis


June 11 (Bloomberg) -- Sales at U.S. retailers probably rose in May for the first time in three months as shoppers returned to automobile showrooms seeking bargains, economists said before a government report today.

Purchases climbed 0.5 percent, according to the median estimate of 76 economists surveyed by Bloomberg News. Sales probably increased 0.2 percent excluding autos, led by gains at service stations as gasoline prices rose, economists said.

The pending demise of some Chrysler LLC and General Motors Corp. dealers gave sales a boost as consumers, grappling with rising unemployment, sought discounts. Tax breaks and income supplements from the Obama administration’s stimulus plan are also propping up demand, even as the need to boost savings signals sustained gains in spending will be slow to develop.

“Spending improved as the fiscal stimulus put cash in consumers’ pockets,” said Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania. “There are still a number of headwinds which threaten the economy’s recovery.”

The Commerce Department’s report is due at 8:30 a.m. in Washington. Economists’ forecasts for total sales ranged from a decline of 0.3 percent to a gain of 1.4 percent. Estimates for non-auto purchases ranged from a 0.5 percent drop to an increase of 1.2 percent.

At the same time, the Labor Department may report that 615,000 workers filed claims for jobless benefits last week, compared with 621,000 a week earlier, according to the survey median.

Job Cuts

Employers eliminated 345,000 workers from payrolls in May, the fewest since September and a sign the recession is abating, Labor figures last week showed. Retailers cut 17,500 positions, the smallest reduction since June 2008, the month before spending started to sink.

Sales of cars and light trucks rose to a 9.9 million annual unit pace in May from a 9.3 million rate the prior month, according to industry figures released June 2. Purchases reached a 9.1 million pace in February, the lowest level since 1981.

General Motors, Chrysler and Ford Motor Co., the only major U.S. automaker not in bankruptcy, all had smaller declines than forecast in comparison with May 2008.

“It’s just a slight uptick,” Ken Czubay, Ford vice president of sales and marketing, said on a conference call June 2. “This is still a very fragile industry.”

Only Essentials

The International Council of Shopping Centers last week said May same-store sales dropped 4.6 percent from the same month last year, more than double its forecast of a 2 percent decline. Macy’s Inc., Dillard’s Inc. and Saks Inc. were among merchants that reported steeper declines than analysts estimated as Americans focused on buying essentials rather than discretionary items.

With home values falling, credit tight and unemployment forecast to keep rising after reaching a 25-year high of 9.4 percent reached in May, consumers are reluctant to spend on anything beyond necessities such as gasoline and food.

Wal-Mart Stores Inc., the biggest retailer, projected last month that its U.S. comparable-store sales may rise as much as 3 percent in the 13 weeks through July 31.

With demand still weak, companies probably cut inventories by 1 percent in April, an eighth consecutive decrease, economists said another Commerce report at 10 a.m. will show.

Federal Reserve Chairman Ben S. Bernanke last week told Congress that the pace of decline in the economy was slowing and consumer spending had stabilized.

Spending “has been roughly flat since the turn of the year,” he said. While the fiscal stimulus will boost spending power, weak labor conditions, tight credit and falling wealth may limit sales, he said.

Bloomberg Survey

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Initial Retail Retail Business
Claims Sales ex-autos Inv.
,000’s MOM% MOM% MOM%
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Date of Release 06/11 06/11 06/11 06/11
Observation Period 6-Jun May May April
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Median 615 0.5% 0.2% -1.0%
Average 613 0.5% 0.3% -0.9%
High Forecast 640 1.4% 1.2% 1.4%
Low Forecast 580 -0.3% -0.5% -1.3%
Number of Participants 45 76 71 52
Previous 621 -0.4% -0.5% -1.0%
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4CAST Ltd. 610 0.6% 0.5% ---
Action Economics 610 0.5% 0.2% -1.2%
AIG Investments --- 1.1% 0.9% -1.3%
Aletti Gestielle SGR 620 0.4% 0.0% -1.2%
Ameriprise Financial Inc 612 0.4% 0.2% -1.0%
Argus Research Corp. --- 0.0% 0.2% -0.8%
Bank of Tokyo- Mitsubishi 625 1.2% 1.0% -1.0%
Bantleon Bank AG --- 0.4% 0.3% ---
Barclays Capital 615 0.4% 0.3% -1.1%
BBVA 615 0.5% 0.3% -1.1%
BMO Capital Markets 600 0.5% 0.2% -1.2%
BNP Paribas 606 0.6% 0.1% -0.7%
Briefing.com 610 0.3% 0.0% -0.8%
Calyon --- 0.5% 0.3% ---
CIBC World Markets --- 0.3% 0.1% -1.0%
Citi 590 0.5% 0.2% -0.8%
ClearView Economics --- 0.6% 0.2% -0.8%
Commerzbank AG 620 0.5% 0.1% -1.0%
Credit Suisse 610 0.4% 0.3% -1.0%
Daiwa Securities America --- 0.3% 0.1% -1.2%
DekaBank --- 0.6% 0.3% -1.0%
Desjardins Group 625 0.3% 0.1% -1.1%
Deutsche Bank Securities --- 0.5% 0.1% -0.9%
Deutsche Postbank AG --- 0.3% 0.1% ---
DZ Bank --- 0.5% 0.3% ---
First Trust Advisors 621 1.3% 1.2% -1.1%
Fortis --- 0.5% --- -0.8%
FTN Financial --- -0.3% -0.5% ---
Goldman, Sachs & Co. --- 0.7% 0.4% ---
Helaba 620 1.0% 0.6% -1.0%
Herrmann Forecasting 609 0.6% 0.3% -1.0%
High Frequency Economics 621 1.0% 0.7% -1.1%
Horizon Investments --- 0.3% 0.3% -1.2%
HSBC Markets 620 0.9% 0.7% -0.9%
IDEAglobal 625 0.5% 0.2% -0.8%
IHS Global Insight --- 0.9% 0.6% ---
Informa Global Markets 625 0.7% 0.2% -0.8%
ING Financial Markets 615 0.5% 0.1% -1.1%
Intesa-SanPaulo --- 0.3% 0.2% ---
J.P. Morgan Chase 625 1.4% 0.6% -1.0%
Janney Montgomery Scott L --- 0.7% 0.3% -1.3%
Johnson Illington Advisor --- 0.4% 0.1% -1.0%
JPMorgan’s Private Wealth --- 0.3% 0.2% 0.4%
Landesbank Berlin 600 0.3% -0.3% -1.2%
Landesbank BW --- 0.8% --- ---
Maria Fiorini Ramirez Inc 605 0.7% 0.5% ---
Merrill Lynch 580 0.4% 0.1% -1.0%
MFC Global Investment Man 599 0.1% -0.1% -0.5%
Mizuho Securities 625 0.1% 0.0% -1.2%
Moody’s Economy.com 615 0.5% 0.3% -0.9%
Morgan Stanley & Co. --- 0.1% 0.2% ---
National Bank Financial 600 0.6% 0.3% ---
Natixis --- 0.5% 0.4% ---
Newedge --- 0.4% 0.2% ---
Nomura Securities Intl. --- -0.1% 0.3% ---
PNC Bank --- 1.1% 1.0% -0.7%
Raymond James 595 0.3% 0.0% ---
RBC Capital Markets --- 0.4% 0.1% ---
RBS Securities Inc. 630 0.6% 0.4% -0.9%
Ried, Thunberg & Co. 620 0.9% 0.6% -0.9%
Schneider Foreign Exchang 610 -0.2% -0.2% -0.4%
Scotia Capital 630 -0.1% -0.2% ---
Societe Generale --- 0.7% 0.5% ---
Stone & McCarthy Research 640 0.8% 0.6% -1.1%
TD Securities 610 0.9% 0.3% ---
Thomson Reuters/IFR 610 0.8% 0.5% 1.4%
Tullett Prebon 615 0.4% --- -0.5%
UBS Securities LLC 625 1.1% 0.4% -1.0%
Unicredit MIB 600 0.2% 0.2% ---
University of Maryland 600 0.3% 0.0% -1.0%
Wachovia Corp. --- 0.2% 0.7% -1.0%
Wells Fargo & Co. 610 0.5% --- -1.2%
WestLB AG --- 0.1% 0.0% ---
Westpac Banking Co. 605 0.5% 0.1% -0.8%
Wrightson Associates 620 0.9% 0.6% -0.9%
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