Bloomberg News

Retail Sales in U.S. Probably Rose in June on Automobile Demand

July 15, 2013

Retail sales probably rose in June by the most in four months, led by stronger demand for automobiles and showing Americans are weathering effects of higher taxes, economists said before a report today.

A 0.8 percent advance would follow a 0.6 percent increase in May, according to the median forecast of 67 economists surveyed by Bloomberg. Purchases excluding motor vehicles may have climbed 0.5 percent after a 0.3 percent gain.

Cheaper borrowing costs and household wealth fueled by higher home and stock prices are helping drive sales of big-ticket items such as cars. An improving job market is also underpinning consumer spending, the biggest part of the economy, one reason growth is projected to pick up as the rest of the year progresses.

“Retail sales will look pretty strong for June, particularly given how well auto sales are doing,” said Robert Rosener, an economist at Credit Agricole CIB in New York. “The recovery in household wealth is boosting demand. We see the consumer coming back in the second half.”

The Commerce Department will release the retail sales figures at 8:30 a.m. in Washington. Economists’ estimates in the Bloomberg survey ranged from gains of 0.3 percent to 1.3 percent.

Automobile demand remains a bright spot as Americans replace older vehicles. Cars and light trucks sold in June at a 15.89 million annual rate, the fastest since November 2007, according to data from Ward’s Automotive Group. Attractive financing offers and steady hiring are also helping generate more industry sales.

Ford, GM

Ford Motor Co. (F:US) and General Motors Co. (GM:US), makers of the best-selling big pickups in the U.S., reported June sales that beat analysts’ estimates. Low borrowing costs and rising consumer wealth should continue to support spending, according to Jenny Lin, Dearborn, Michigan-based Ford’s senior U.S. economist.

Household wealth has been boosted by a rally in the stock market and higher property values. Home prices in the 12 months ended in April rose by the most in more than seven years, according to the S&P/Case-Shiller index of property values. The Standard & Poor’s 500 Index last week reached a record high.

“Economic indicators continue to improve,” Lin said on a July 2 sales call. The “consumer spending growth pace is slowly picking up.”

Costco Wholesale Corp. (COST:US), the largest U.S. warehouse-club chain, reported a 6 percent gain in June sales at U.S. stores open at least a year, more than analysts’ projections.

Gasoline Prices

Costlier gasoline in early June probably lifted receipts at filling stations. The Commerce Department’s retail sales data aren’t adjusted for changes in prices.

A gallon of regular gasoline at the pump, which reached $3.63 on June 9, eased in the next few weeks to a five-month low of $3.47 on July 7, according to AAA, the biggest U.S. motoring group. Retail gasoline has again reversed course, having risen four days in a row as crude oil costs surged and refinery units shut down for repairs.

More expensive fuel bills leave less for households to spend on other goods. Retail purchases excluding automobiles and gasoline, probably rose 0.4 percent, up from the prior month’s 0.3 percent gain, economists projected.

The world’s largest economy will expand at a 2.3 percent annualized pace in the third quarter after cooling to a projected 1.6 percent rate in the April through June period, according to the median forecast in a Bloomberg survey from July 5 to July 10. Household spending also will pick up, economists forecast.

Federal Reserve Chairman Ben S. Bernanke, in testimony to Congress this week, may shed more light on the central bank’s view of the economy and how policy makers may begin scaling back $85 billion in monthly bond purchases. The U.S. needs “highly accommodative” monetary policy for the foreseeable future, he said last week.

                  Bloomberg Survey

=====================================================
                            Retail   Retail Business
                             Sales ex-autos     Inv.
                              MOM%     MOM%     MOM%
=====================================================
Date of Release              07/15    07/15    07/15
Observation Period            June     June      May
----------------------------------------------------
Median                        0.8%     0.5%     0.0%
Average                       0.8%     0.5%     0.1%
High Forecast                 1.3%     0.9%     0.5%
Low Forecast                  0.3%     0.2%    -0.3%
Number of Participants          67       57       40
Previous                      0.6%     0.3%     0.3%
----------------------------------------------------
4CAST                         0.9%     0.5%    -0.1%
ABN Amro                      0.6%     ---      0.2%
Action Economics              0.6%     0.4%     0.0%
Ameriprise Financial          0.7%     0.5%     0.1%
Banca Aletti                  1.0%     0.2%     ---
Bank of the West              0.8%     0.4%     0.0%
Banorte-IXE                   0.9%     ---      ---
Bantleon Bank AG              0.8%     0.5%     ---
Barclays                      0.7%     0.5%     0.0%
Bayerische Landesbank         0.8%     0.5%     ---
BMO Capital Markets           0.9%     0.7%     0.0%
BNP Paribas                   0.6%     ---      ---
BofA Merrill Lynch            0.9%     0.6%     ---
Briefing.com                  0.9%     0.7%    -0.2%
Capital Economics             1.0%     0.7%     0.3%
CIBC World Markets            0.9%     0.6%     ---
Citi                          0.8%     0.6%    -0.1%
ClearView Economics           0.9%     0.4%     0.3%
Commerzbank AG                0.7%     0.4%     ---
Credit Agricole CIB           0.7%     0.3%    -0.1%
Credit Suisse                 0.8%     0.6%     0.0%
DekaBank                      1.0%     0.4%     0.0%
Desjardins Group              0.7%     0.4%     0.0%
Deutsche Bank Securities      1.0%     0.6%     0.0%
Deutsche Postbank AG          0.7%     0.3%     ---
DZ Bank                       0.3%     0.2%     ---
First Trust Advisors          0.6%     0.4%     0.0%
Helaba                        0.7%     0.4%     0.2%
HSBC Markets                  0.7%     0.4%     ---
Hugh Johnson Advisors         0.6%     0.3%     0.4%
IDEAglobal                    0.7%     0.5%     0.5%
IHS Global Insight            0.9%     0.7%     0.4%
Informa Global Markets        0.9%     0.5%     0.2%
ING Financial Markets         0.6%     0.4%     0.2%
Intesa Sanpaolo               0.8%     0.5%     ---
Janney Montgomery Scott       0.7%     0.3%    -0.2%
Jefferies                     0.9%     0.3%     0.0%
John Hancock Financial        0.6%     0.3%     0.2%
Landesbank Berlin             0.6%     0.5%     ---
Landesbank BW                 0.8%     ---      ---
Lloyds Tsb Bank               0.8%     0.5%     0.4%
Maria Fiorini Ramirez         0.8%     0.4%     ---
MET Capital Advisors          0.7%     ---      ---
Modal Asset                   0.4%     ---      ---
Moody’s Analytics             0.6%     0.2%     0.0%
Morgan Stanley                1.3%     0.9%     0.0%
National Bank Financial       0.6%     0.2%     ---
Natixis                       0.6%     0.3%     ---
Nomura Securities             1.0%     0.6%     ---
OSK Group/DMG                 0.8%     0.4%     ---
Pierpont Securities           0.9%     0.6%     ---
PNC Bank                      0.7%     0.5%     0.0%
Raiffeisenbank International  0.9%     0.6%     0.2%
Raymond James                 0.8%     0.4%     ---
RBC Capital Markets           1.0%     0.8%     ---
Regions Financial             0.8%     0.4%    -0.2%
Scotiabank                    0.5%     0.3%     ---
SMBC Nikko Securities         0.6%     0.5%     0.3%
Standard Chartered Bank       0.9%     ---      0.2%
Stone & McCarthy              0.8%     0.5%    -0.2%
TD Securities                 1.0%     0.7%    -0.3%
UniCredit Research            0.8%     ---      ---
Union Investment              0.6%     ---      ---
University of Maryland        0.4%     0.3%    -0.3%
Wells Fargo & Co.             0.6%     0.3%    -0.3%
Westpac Banking Co.           0.7%     ---      0.1%
Wrightson ICAP                0.9%     0.6%     0.3%
=====================================================

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

  • F
    (Ford Motor Co)
    • $14.81 USD
    • 0.36
    • 2.43%
  • GM
    (General Motors Co)
    • $31.75 USD
    • 0.60
    • 1.89%
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