Bloomberg News

U.S. Retail Sales Probably Rose on Auto Demand

July 16, 2012

Retail sales in the U.S. probably rose in June for the first time in three months as a gain in demand for automobiles outshined spending on other goods, economists said before a report today.

The projected 0.2 percent advance in purchases would follow a 0.2 percent May drop, according to the median forecast of 72 economists surveyed by Bloomberg News. Another report may show a manufacturing accelerated in the New York region in July.

Receipts at merchants other than auto dealers were probably little changed as a weakening job market sapped households of the confidence and the incomes needed to boost expenditures. Without a pickup in spending at retailers like Target Corp. and Macy’s Inc., the recovery will have difficulty gaining momentum.

“Because of the pop in auto sales, this report is going to be a slightly better than it was the previous month,” said Steven Ricchiuto, chief economist at Mizuho Securities USA Inc. in New York. “The consumer is still bumping along, providing enough strength to keep the economy moving forward but not enough strength to move the economy back to trend.”

The Commerce Department will release the figures at 8:30 a.m. in Washington. Economists’ estimates ranged from a decline of 0.4 percent to a gain of 0.5 percent.

One bright spot, auto purchases have held up as Americans replace aging vehicles. Cars and light trucks sold at a 14.1 million annual rate in June, compared with a 13.7 million pace in May that was the weakest of the year, Ward’s Automotive Group data show. General Motors Co. (GM:US), Ford Motor Co. and Chrysler Group LLC reported sales that topped analysts’ estimates.

‘Tremendous Opportunity’

“We’ve got just some tremendous opportunity in the back half of the year,” Kurt McNeil, U.S. vice president of sales at General Motors, said during a July 3 conference call. “We still see headwinds, but at the end of the day we’re calling for moderate, gradual economic growth.”

Even so, scant income gains have prevented consumers from boosting spending on other goods. Same-store sales at the more than 20 companies tracked by Retail Metrics Inc. increased 0.3 percent in June from the same time last year following a 4 percent gain in May.

Sales at Target rose 2.1 percent in June, falling short of the average projection for a 2.8 percent gain from analysts surveyed by Retail Metrics. Macy’s, the second-biggest U.S. department-store chain, posted a 1.2 percent increase compared with a 2.3 percent estimate.

The Standard & Poor’s Supercomposite Retailing Index (S15RETL) rose 1.7 percent in June, compared with a 4 percent gain for the broader S&P 500.

Consumer Spending

Consumer spending, about 70 percent of the economy, grew at a 2.5 percent annual rate in the first quarter, according to Commerce Department data. Economists surveyed this month forecast it increased at a 1.9 percent rate from April to June while the economy as a whole expanded at a 1.8 percent pace.

“The economy in North America continues to be fragile as consumer confidence lags and job growth remains anemic,” Vernon Nagel, chairman and chief executive of Acuity Brands Inc. (AYI:US), a lighting fixture maker, said during a July 2 earnings call. “We expect the macroeconomic environment for the balance of 2012 to continue to be influenced by external concerns, including fiscal and monetary policy in U.S and European debt crisis which is eroding business and consumer confidence.”

The retail sales category used by the Commerce Department to calculate gross domestic product, which excludes sales at auto dealers, building-material stores and service stations, will show a 0.2 percent gain in June after no change the prior month, according to economists surveyed.

Gasoline Prices

Cheaper gasoline is providing some relief for household budgets. The average price of a gallon of regular fuel at the pump fell to $3.33 on July 1, the lowest in six months, according to AAA, the nation’s largest auto club.

Also today, an 8:30 a.m. report from the Federal Reserve Bank of New York is projected to show factories in its region expanded at a faster pace in July. A 10 a.m. report from the Commerce Department may show inventories at U.S. businesses increased 0.2 percent in May after a 0.4 percent gain, according to the Bloomberg survey median.

                        Bloomberg Survey

================================================================
                            Empire   Retail   Retail Business
                             Manu.    Sales ex-autos     Inv.
                             Index     MOM%     MOM%     MOM%
================================================================

Date of Release              07/16    07/16    07/16    07/16
Observation Period            July     June     June      May
----------------------------------------------------------------
Median                         4.0     0.2%     0.0%     0.2%
Average                        3.3     0.2%     0.0%     0.2%
High Forecast                  9.3     0.5%     0.3%     0.5%
Low Forecast                  -8.0    -0.4%    -0.6%    -0.2%
Number of Participants          48       72       62       37
Previous                       2.3    -0.2%    -0.4%     0.4%
----------------------------------------------------------------
4CAST                          0.0    -0.1%     0.1%     ---
ABN Amro                       4.0     0.1%     ---      0.2%
Action Economics               7.0     0.1%     0.0%     0.2%
Ameriprise Financial           2.0    -0.1%    -0.3%     0.3%
Banca Aletti                  ---      0.1%    -0.1%     0.1%
Bantleon Bank AG               3.5     0.1%    -0.1%     ---
Barclays                       5.0     0.2%     0.0%     0.3%
Bayerische Landesbank          0.5     0.1%    -0.1%     ---
BBVA                           1.0     0.1%     0.0%     0.2%
BMO Capital Markets            5.0     0.1%    -0.1%     0.3%
BNP Paribas                    4.0     0.1%     0.0%     ---
BofA Merrill Lynch             3.0     0.0%    -0.1%     ---
Briefing.com                   0.0     0.4%     0.2%     0.2%
Capital Economics              5.0     0.3%     0.2%     ---
CIBC World Markets            ---      0.2%     0.1%     ---
Citi                          ---      0.2%     0.1%     0.0%
ClearView Economics           -5.0     0.0%     0.2%     0.3%
Comerica                      ---     -0.4%    -0.6%    -0.2%
Commerzbank AG                 0.0     0.0%    -0.1%     0.3%
Credit Agricole CIB            3.5     0.3%     0.1%     0.2%
Credit Suisse                 ---      0.3%     0.2%     0.1%
Danske Bank                   ---     -0.2%     ---      ---
DekaBank                      ---      0.2%     0.0%     ---
Desjardins Group               5.0     0.2%     0.0%     0.1%
Deutsche Bank Securities       8.0     0.4%     0.3%     0.3%
Deutsche Postbank AG          ---      0.1%    -0.1%     ---
DZ Bank                        3.0     0.1%    -0.1%     ---
Exane                          5.0     0.1%    -0.1%     ---
First Trust Advisors           4.5     0.0%    -0.4%     0.1%
Helaba                         0.0     0.2%    -0.1%     0.3%
HSBC Markets                   5.0     0.3%     0.2%     ---
Hugh Johnson Advisors          8.0     0.0%    -0.2%     0.4%
IDEAglobal                     5.0     0.4%     0.2%     0.5%
IHS Global Insight            -3.0     0.1%     0.0%     0.2%
Informa Global Markets         3.3     0.4%     0.1%     0.4%
ING Financial Markets          3.5     0.1%     0.2%     ---
Insight Economics              5.0     0.3%     0.2%     0.2%
Intesa Sanpaulo                4.0     0.2%    -0.1%     ---
Janney Montgomery Scott       ---      0.3%     0.1%     ---
Jefferies & Co.                0.0     0.2%     0.0%     0.3%
John Hancock Financial        ---      0.1%     ---      ---
Landesbank Berlin             ---      0.2%    -0.2%     0.2%
Landesbank BW                  7.0     0.2%     ---      ---
Lloyds Bank                    5.0     0.1%     0.0%     0.3%
Maria Fiorini Ramirez         ---      0.2%     0.0%     ---
MET Capital Advisors          ---      0.3%     ---      ---
Moody’s Analytics              9.3    -0.2%    -0.3%     0.3%
National Bank Financial       ---      0.1%    -0.1%     ---
Natixis                       ---      0.3%     0.1%     ---
Nomura Securities              3.1     0.2%    -0.1%     ---
Nord/LB                        4.0     0.2%     0.2%     ---
OSK Group/DMG                 ---      0.3%     0.1%     ---
Pierpont Securities           ---      0.4%     0.1%     ---
PNC Bank                      ---      0.1%     0.2%     0.2%
Raiffeisenbank International  ---      0.2%     0.0%     0.2%
Raymond James                  3.5     0.3%     0.1%     ---
RBC Capital Markets           -2.0     0.1%     0.0%     ---
Renaissance Macro Research     2.0     0.2%     0.1%     ---
Scotiabank                    ---      0.1%    -0.2%     ---
SMBC Nikko Securities          8.0     0.3%     0.1%     0.2%
Societe Generale               5.7     0.4%     0.2%     ---
Southern Polytechnic State    ---      0.5%     ---      ---
Standard Chartered             4.1     0.2%     ---      ---
Stone & McCarthy Research      6.7     0.2%     0.0%    -0.1%
TD Securities                  5.0     0.1%    -0.1%     0.5%
UBS                           -2.5     0.0%    -0.1%     0.0%
UniCredit Research            ---      0.2%     ---      ---
Union Investment              ---      0.3%     ---      ---
University of Maryland         6.0     0.1%     0.0%     0.3%
Wells Fargo & Co.             ---     -0.1%    -0.1%     0.2%
Westpac Banking Co.           -8.0    -0.2%     ---      0.4%
Wrightson ICAP                 5.0     0.3%     0.2%     0.2%
================================================================

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

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


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Companies Mentioned

  • GM
    (General Motors Co)
    • $34.48 USD
    • 0.25
    • 0.73%
  • AYI
    (Acuity Brands Inc)
    • $124.87 USD
    • -1.87
    • -1.5%
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