Bloomberg News

Retail Sales in U.S. Probably Fell in May as Auto Demand Cooled

June 13, 2012

Retail Sales in U.S. Probably Fell in May as Auto Demand Cooled

Cars and light trucks sold at a 13.7 million annual rate in May, the weakest this year and down from April’s 14.4 million pace, Ward’s Automotive Group data showed. Photographer: Daniel Acker/Bloomberg

Retail sales in the U.S. probably declined in May for the first time in a year as slower employment and subdued wage gains damped demand for automobiles, economists said before a report today.

The projected 0.2 percent decrease last month would follow a 0.1 percent gain in April that was the smallest this year, according to the median forecast of 78 economists surveyed by Bloomberg News. A separate report may show prices paid to producers fell for a second month.

Limited gains in payrolls and unemployment exceeding 8 percent signal it’ll be tough for consumer spending, the biggest part of the economy, to accelerate from a first-quarter advance that was the biggest in a year. At the same time, lower prices at the gasoline pump are providing relief for Americans, helping sustain sales at retailers like Target Corp. (TGT:US)

“We’re looking for pretty disappointing retail sales results,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “Jobs are a little harder to come by and the average consumer is less optimistic about their financial health. That’s reducing demand. We’re headed to a relatively soft year for consumer spending.”

The Commerce Department’s figures are due at 8:30 a.m. in Washington. Economists’ estimates ranged from a decline of 0.7 percent to a gain of 0.5 percent.

Also at 8:30, a Labor Department report may show the producer price index (S15RETL) fell 0.6 percent in May after a 0.2 percent drop the prior month, according to the Bloomberg survey median. Lower fuel costs are subduing inflation.

Less Inflation

Receding inflation gives the Federal Reserve more flexibility to take steps to spur the economy if needed.

“The situation in Europe poses significant risks to the U.S. financial system and economy and must be monitored closely,” Fed Chairman Ben S. Bernanke told lawmakers on June 7. “As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate.”

Cars and light trucks sold at a 13.7 million annual rate in May, the weakest this year and down from April’s 14.4 million pace, Ward’s Automotive Group data showed. Year-over-year gains of 11 percent at General Motors Co. (GM:US) and 30 percent at Chrysler Group LLC trailed analysts’ projections. Ford Motor Co. (F:US), the only major automaker which topped estimates with a 13 percent increase in sales, boosted incentives by about $100 per vehicle.

Retail sales excluding autos probably were little changed last month, the weakest performance so far this year, according to the Bloomberg survey median.

Employment Cools

Monthly employment gains have decelerated from a high this year of 275,000 in January. Payrolls rose 69,000 in May after a 77,000 increase in April, according to data from the Labor Department. The jobless rate climbed to 8.2 percent from 8.1 percent. Average hourly earnings rose 1.7 percent last month from May 2011, the smallest increase since December 2010.

Atlanta-based Home Depot Inc. (HD:US), the largest U.S. home- improvement retailer, is among companies projecting joblessness will remain stubbornly high.

“We will still face higher-than-normal unemployment and underemployment rates, with the consequence that value will remain of major importance to our customers,” Chief Executive Officer Frank Blake said on an analyst conference call on June 6. “Growth will be moderate.”

Gasoline Prices

The Commerce Department’s retail sales data, which aren’t adjusted for prices, may also reflect cheaper gasoline. A gallon of regular fuel at the pump cost an average $3.71 in May, down from this year’s peak of $3.94 on April 4, according to AAA, the biggest U.S. auto group. It was down to $3.54 on June 11.

Less expensive gasoline may have helped free up cash for purchases of other items like clothing and home goods, company reports indicated. May same-store sales climbed more than analysts projected for Target, the second-largest U.S. discount chain, and Limited Brands Inc., the operator of the Victoria’s Secret lingerie stores.

The drop in fuel costs helped shore up Americans’ finances and improved the buying climate, leading the Bloomberg Consumer Comfort Index to rise for the third consecutive week, figures showed on June 7.

Investors are betting that Americans will keep shopping. The Standard & Poor’s Supercomposite Retailing Index, which includes Macy’s Inc. and Gap Inc., has gained 16 percent this year through yesterday, compared with a 5.3 percent advance in the broader S&P 500. (SPX)

Household purchases will grow at 2.3 percent annual rates in each of the final three quarters of 2012, according to the median forecast in a separate Bloomberg survey of economists taken from June 1 to June 5. Consumer spending expanded at a 2.7 percent pace last quarter.

                         Bloomberg Survey

================================================================
                               PPI     Core   Retail   Retail
                                        PPI    Sales ex-autos
                              MOM%     MOM%     MOM%     MOM%
================================================================

Date of Release              06/13    06/13    06/13    06/13
Observation Period             May      May      May      May
----------------------------------------------------------------
Median                       -0.6%     0.2%    -0.2%     0.0%
Average                      -0.6%     0.2%    -0.2%     0.0%
High Forecast                 0.3%     0.3%     0.5%     0.4%
Low Forecast                 -1.5%    -0.2%    -0.7%    -0.5%
Number of Participants          76       70       78       72
Previous                     -0.2%     0.2%     0.1%     0.1%
----------------------------------------------------------------
4CAST Ltd.                   -0.7%     0.2%    -0.4%    -0.2%
ABN Amro Inc.                -0.6%     0.2%    -0.2%     ---
Action Economics             -0.8%     0.2%    -0.1%     0.0%
Ameriprise Financial Inc     -0.6%     0.1%    -0.1%     0.1%
Banca Aletti & C spa         -0.9%     0.2%     0.0%     0.3%
Bantleon Bank AG             -0.5%     ---     -0.3%    -0.1%
Barclays                     -0.6%     0.2%    -0.1%     0.0%
BBVA                         -0.4%     0.1%    -0.1%     0.0%
BMO Capital Markets          -0.6%     0.2%    -0.2%     0.1%
BNP Paribas                  -0.8%     0.2%    -0.3%    -0.1%
BofA Merrill Lynch Resear    -0.3%     0.2%    -0.4%     0.1%
Briefing.com                 -0.4%     0.1%    -0.3%    -0.1%
Capital Economics            -0.6%     0.2%    -0.2%     0.0%
CIBC World Markets           -0.8%     0.2%    -0.2%     0.0%
Citi                         -0.6%     0.2%    -0.3%    -0.1%
ClearView Economics          -0.4%     0.1%    -0.1%     0.2%
Commerzbank AG               -0.8%     0.2%    -0.3%     0.0%
Credit Agricole CIB          -0.6%     0.2%    -0.2%     0.0%
Credit Suisse                -0.2%     0.2%    -0.2%    -0.1%
Daiwa Securities America     -0.2%     0.2%    -0.5%    -0.5%
DekaBank                      ---      ---     -0.2%    -0.1%
Desjardins Group             -0.8%     0.0%    -0.3%    -0.1%
Deutsche Bank Securities     -0.5%     0.1%     0.0%     0.3%
Deutsche Postbank AG         -0.7%     0.1%     0.0%     0.2%
DZ Bank                      -0.7%     0.2%     0.0%     0.0%
Exane                        -0.5%     0.2%     0.0%     0.2%
Fact & Opinion Economics     -0.4%     0.1%     0.2%     0.3%
First Trust Advisors         -0.6%     0.2%    -0.4%     0.0%
FTN Financial                -0.8%     0.2%    -0.5%    -0.2%
Goldman, Sachs & Co.         -0.3%     0.1%    -0.5%    -0.3%
Helaba                       -0.7%     0.2%    -0.2%    -0.1%
High Frequency Economics     -1.0%     0.2%    -0.7%    -0.5%
HSBC Markets                 -0.5%     0.2%    -0.1%    -0.1%
Hugh Johnson Advisors        -0.1%     0.2%     0.2%     0.1%
IDEAglobal                   -0.5%     0.1%     0.3%     0.2%
IHS Global Insight           -1.2%     0.2%    -0.4%    -0.3%
Informa Global Markets       -0.7%     0.1%    -0.4%     0.0%
ING Financial Markets        -0.7%     0.2%     0.2%     0.2%
Insight Economics            -1.0%     0.2%    -0.5%     0.0%
Intesa Sanpaulo              -1.0%     ---     -0.3%    -0.1%
J.P. Morgan Chase            -0.9%     0.2%    -0.5%    -0.4%
Janney Montgomery Scott L    -0.3%     0.2%    -0.3%     0.1%
Jefferies & Co.              -0.9%     0.2%    -0.2%     0.2%
John Hancock Financial        0.0%    -0.2%     0.4%     0.4%
Landesbank Berlin             0.3%     0.0%    -0.3%     0.0%
Landesbank BW                -0.6%     ---      0.1%     ---
Maria Fiorini Ramirez Inc    -0.6%     0.2%    -0.3%    -0.1%
Market Securities            -0.7%     0.2%    -0.3%     ---
MET Capital Advisors         -0.6%     ---     -0.2%     ---
Mizuho Securities            -0.9%     0.0%    -0.2%    -0.1%
Moody’s Analytics            -0.8%     0.2%    -0.2%    -0.1%
Morgan Stanley & Co.         -1.0%     0.2%    -0.3%    -0.1%
National Bank Financial      -0.5%     0.1%    -0.1%     0.0%
Natixis                      -0.3%     0.2%    -0.2%     0.0%
Nomura Securities Intl.      -0.7%     0.1%    -0.1%    -0.1%
Nord/LB                      -0.5%     0.2%     0.0%     0.2%
OSK Group/DMG                 ---      ---     -0.4%    -0.1%
O’Sullivan                   -1.0%     0.2%    -0.5%    -0.3%
Parthenon Group              -0.3%     0.1%    -0.5%    -0.2%
Pierpont Securities LLC      -0.9%     0.2%    -0.3%    -0.1%
PineBridge Investments       -0.3%     0.2%     0.0%     0.2%
PNC Bank                     -0.3%     0.1%    -0.1%     0.1%
Raiffeisenbank Internatio    -0.8%     0.3%    -0.3%    -0.1%
Raymond James                -0.3%     0.1%     0.5%     0.4%
RBC Capital Markets          -0.8%     0.1%    -0.4%    -0.1%
RBS Securities Inc.          -0.9%     0.1%    -0.4%    -0.1%
Scotiabank                   -0.6%     0.1%    -0.1%     0.0%
Societe Generale             -1.3%     0.3%    -0.7%    -0.3%
Standard Chartered           -0.8%     ---     -0.5%     0.2%
Stone & McCarthy Research    -0.6%     0.2%    -0.3%    -0.3%
TD Securities                -1.5%     0.1%    -0.1%     0.2%
UBS                          -1.2%     0.2%    -0.3%    -0.1%
Union Investment             -0.2%     ---      0.3%     ---
University of Maryland       -1.0%     0.2%    -0.2%     0.0%
Wells Fargo & Co.            -0.7%     0.2%    -0.2%    -0.1%
WestLB AG                    -0.6%     0.2%     0.1%     0.1%
Westpac Banking Co.          -0.8%     0.2%    -0.2%     ---
Wrightson ICAP               -0.9%     0.2%    -0.3%    -0.1%
================================================================

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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Companies Mentioned

  • TGT
    (Target Corp)
    • $59.79 USD
    • -0.26
    • -0.44%
  • GM
    (General Motors Co)
    • $37.79 USD
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