http://www.businessweek.com/news/2013-12-12/retail-sales-in-u-dot-s-dot-probably-increased-by-most-in-five-months

Bloomberg News

Retail Sales in U.S. Probably Increased by Most in Five Months

December 12, 2013

Retail sales probably rose in November by the most in five months as Americans bought cars and took advantage of discounts going into the holiday-shopping season, economists said before a report today.

Purchases (RSTAMOM) climbed 0.6 percent, the biggest gain since June, after a 0.4 percent advance in October, according to the median forecast of 83 economists surveyed by Bloomberg. Sales excluding automobiles rose 0.2 percent for a second month, the survey showed.

Higher stock prices, rising home values and stronger job growth have helped buoy consumer sentiment, raising the odds that household spending will rebound this quarter from the weakest performance in almost four years. Nonetheless, companies such as Gap Inc. and Costco Wholesale Corp. (COST:US) aren’t taking any chances as they mark down merchandise to spur demand.

“Consumer spending is in better and better shape,” said Brian Jones, senior U.S. economist at Society Generale in New York. “The unemployment rate continues to move lower, more people are working.”

The Commerce Department’s figures are scheduled to be released at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from gains of 0.2 percent to 1.2 percent. Monthly retail sales data are not adjusted for inflation.

Americans are confident enough to buy big-ticket items such as cars. Auto sales last month climbed to a 16.3 million annualized rate, the fastest since May 2007, according to data from Ward’s Automotive Group. November deliveries rose 16 percent for Chrysler Group LLC from the same month last year, 14 percent for General Motors Co. and more than 10 percent for Toyota Motor Corp. (TM:US) and Nissan Motor Co.

Black Friday

The results were less clear-cut for retailers other than auto dealers. In the days after Thanksgiving, known as the Black Friday weekend, spending dropped for the first time since 2009, with retailers extending discounts, according to the National Retail Federation in Washington. The holiday-shopping period that runs through Christmas typically accounts for 20 percent of retailers’ annual profit, according to the group.

Store traffic plunged 10.2 percent in the week ended Dec. 7 compared with a 2.3 percent gain in the week after Thanksgiving a year ago, according to data from researcher ShopperTrak.

Conversely, online shopping surged about 20 percent to a record on Cyber Monday as consumers took to the Internet to buy gifts.

San Francisco-based Gap and Issaquah, Washington-based Costco are relying more on promotions. Costco, the largest U.S. warehouse-club chain, yesterday reported fiscal first-quarter profits that trailed analysts’ estimates after it used discounts to drive sales.

More Promotions

Business conditions remain “volatile and promotional,” putting pressure on profit margins, said Robert Hanson, chief executive officer of American Eagle Outfitters Inc. (AEO:US) The Pittsburgh-based apparel retailer reported a 6 percent drop in Thanksgiving week revenue from the same period a year ago.

“We continue to operate in the most challenging sector of retail, where there has been intense promotional competition and tepid consumer spending,” Hanson said on a Dec. 6 earnings call. “2013 is not the year we’d planned for.”

A rebound in housing is helping other companies. Home Depot Inc. (HD:US), the largest U.S. home-improvement retailer, said yesterday it expects to meet a profitability goal a year earlier than planned as rising housing prices prompt an increase in renovations.

Stocks, Jobs

Improving stock prices and gains in hiring may also be driving retail demand. The Standard & Poor’s 500 Index is up 25 percent so far this year, and closed at a record on Dec. 9. Payrolls climbed by a more-than-forecast 203,000 workers in November and the jobless rate unexpectedly dropped to a five-year low of 7 percent, figures from the Labor Department showed last week.

Consumer sentiment climbed to a five-month high in December, easing concern household spending would retreat this holiday season, preliminary figures from Thomson Reuters/University of Michigan showed last week.

Rising consumer purchases will probably help propel economic growth this quarter after a surge in stockpiling boosted gross domestic product in the previous three months.

Consumer spending will climb at a 3 percent pace from October through December compared with a 1.4 percent gain in the third quarter that was the weakest since the end of 2009, according to a forecast by economists at Macroeconomic Advisers LLC in St. Louis. At the same time, they project the world’s largest economy will grow at a 1.5 percent rate this quarter compared with 3.6 percent in the previous three months as companies curb inventories.

                   Bloomberg Survey

=======================================================
12/11/2013         Retail   Retail Retail ex   Retail
                    Sales ex-autos  auto/gas  control
                     MOM%     MOM%      MOM%     MOM%
=======================================================
Date of Release     12/12    12/12    12/12    12/12
Observation          Nov.     Nov.     Nov.     Nov.
--------------------------------------------------------
Median               0.6%     0.2%     0.3%     0.3%
Average              0.6%     0.2%     0.3%     0.2%
High Forecast        1.2%     0.6%     0.4%     0.5%
Low Forecast         0.2%    -0.4%    -0.3%    -0.3%
# of replies           83       72       21       21
Previous             0.4%     0.2%     0.3%     0.4%
--------------------------------------------------------
========================================================
4CAST Ltd.           0.4%     0.1%     ---      ---
ABN Amro Inc.        0.6%     ---      ---      ---
Action Economics     0.5%     0.2%     ---      ---
Ameriprise Finan     0.5%     0.3%     0.3%     ---
Banca Aletti & C     0.8%     0.5%     ---      ---
Bank of the West     0.5%     0.2%     ---      ---
Bank of Tokyo- M     1.0%     0.3%     ---      ---
Banorte-IXE          0.5%     0.2%     ---      0.3%
Bantleon Bank AG     0.7%     0.3%     ---      ---
Barclays             0.6%     0.2%     ---      0.3%
Bayerische Lande     0.6%     0.4%     ---      ---
BBVA                 0.2%     0.1%     ---      ---
BMO Capital Mark     0.6%     0.3%     ---      ---
BNP Paribas          0.7%     ---      ---      0.2%
BofA Merrill Lyn     0.5%     0.0%     ---      ---
Capital Economic     1.2%     0.5%     ---      ---
CIBC World Marke     0.8%     0.3%     ---      ---
Citi                 0.7%     0.2%     ---      ---
ClearView Econom     0.7%     0.6%     ---      ---
Comerica Inc         0.7%     0.4%     ---      ---
Commerzbank AG       0.5%     0.1%     ---      ---
Credit Agricole      1.0%     0.3%     ---      ---
Credit Suisse        0.7%     0.2%     0.3%     0.3%
Daiwa Securities     0.5%     0.1%     ---      ---
Danske Bank A/S      0.6%     0.4%     0.4%     ---
DekaBank             0.6%     0.3%     0.3%     0.2%
Desjardins Group     0.8%     0.1%     0.3%     ---
Deutsche Bank Se     0.7%     0.2%     0.4%     ---
First Trust Advi     1.0%     0.4%     ---      ---
FTN Financial        0.4%     0.2%     0.3%     ---
Goldman, Sachs &     0.6%     0.2%     ---      0.2%
Haitong Internat     0.8%     ---      0.4%     ---
Helaba               0.8%     0.2%     ---      ---
High Frequency E     0.7%     0.1%     0.2%     0.1%
HSBC Markets         0.4%     0.3%     0.2%     0.2%
Hugh Johnson Adv     0.3%     0.2%     ---      ---
IDEAglobal           0.5%     0.1%     ---      ---
IHS Global Insig     0.7%     0.2%     ---      ---
Informa Global M     0.7%     0.1%     ---      ---
ING Financial Ma     0.4%     0.1%     0.2%     ---
Intesa Sanpaolo      1.1%     0.3%     ---      ---
J.P. Morgan Chas     0.7%     0.1%     0.2%     0.3%
Janney Montgomer     0.5%    -0.1%     0.1%     ---
Jefferies LLC        0.6%     0.3%     ---      ---
Landesbank Berli     0.3%     0.1%     ---      ---
Landesbank BW        0.6%     ---      ---      ---
Lloyds Tsb Bank      0.7%     0.2%     0.3%     0.3%
Maria Fiorini Ra     0.6%     0.2%     ---      0.2%
MET Capital Advi     0.2%     ---      ---      ---
Mizuho Securitie     0.4%     0.0%     ---      ---
Moody’s Analytic     0.4%     0.1%     ---      0.1%
Morgan Stanley       1.0%     0.3%     ---      0.3%
National Bank Fi     0.6%     0.2%     ---      ---
Natixis              0.6%     0.2%     ---      ---
Newedge              0.6%     0.3%     0.2%     ---
Nomura Securitie     0.8%     0.3%     ---      0.3%
Nord/LB              0.4%     0.2%     ---      ---
OSK-DMG              0.6%     0.0%     ---      ---
Oxford Economics     0.5%     ---      ---      ---
Pantheon Macroec     0.7%     0.1%     ---      ---
Pierpont Securit     0.7%     0.2%     ---      ---
PNC Bank             0.6%     0.3%     ---      ---
Prestige Economi     0.8%     0.4%     ---      ---
Raiffeisenbank I     0.6%     0.2%     ---      ---
Raymond James        0.6%     0.4%     ---      0.5%
RBC Capital Mark     0.5%     0.0%     ---      0.1%
RBS Securities I     0.8%     0.2%     0.4%     ---
Regions Financia     0.7%     0.2%     ---      0.3%
Scotiabank           0.5%    -0.1%     ---      ---
SMBC Nikko Secur     0.5%     0.2%     ---      ---
Societe Generale     0.2%    -0.4%    -0.3%    -0.3%
Southbay Researc     0.4%     ---      ---      ---
Standard Charter     0.6%     ---      0.1%     ---
Sterne Agee & Le     0.4%     0.2%     ---      ---
Stone McCarthy R     0.3%     0.2%     ---      ---
TD Securities        0.4%     0.3%     0.3%     0.2%
UBS                  0.5%     0.2%     0.4%     0.4%
UniCredit Resear     0.6%     ---      ---      ---
Union Investment     0.4%     ---      ---      ---
University of Ma     0.5%     0.1%     ---      ---
Wells Fargo & Co     0.5%     0.1%     ---      ---
Westpac Banking      0.6%     ---      ---      ---
Wrightson ICAP       0.7%     0.2%     0.3%     0.3%
========================================================

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net

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


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