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Mon, Jul 13, 2009 - Page 10 News List

Rise expected in US retail sales

SECOND STRAIGHT INCREASE Consumers are venturing back into stores, hunting for discounts and favoring necessities such as food and fuel over luxury purchases


Retail sales in the US probably increased last month for a second straight month and factory production fell at a slower pace as the recession abated, economists said before reports this week.

Sales gained 0.4 percent after a 0.5 percent increase in May, according to the median estimate in a Bloomberg News survey before the Commerce Department’s report tomorrow. The next day, Federal Reserve figures may show industrial output fell 0.6 percent last month after a 1.1 percent drop in May.

Consumers are venturing back into stores, seeking discounts and favoring necessities such as food or fuel. Even as the projected increase in sales and reports this week on housing may show the worst of the downturn has passed, a turnaround is likely to be gradual.

“The spending is more on staples than discretionary purchases,” Tom Porcelli, a senior economist at RBC Capital Markets in New York, said last week. “Aggregate demand is still amazingly weak. Things aren’t falling apart, but don’t expect a robust recovery.”


An index consumer confidence dropped last week on concerns about job losses, sending stocks lower. The Standard & Poor’s 500 Index closed at 879.13 in New York on Friday, down 0.4 percent from the previous day, capping its fourth straight weekly loss. The Dow Jones Industrial Average closed down 0.5 percent to 8146.52.

Car dealers struggled last month, as sales dropped to a 9.7 million annual pace from a 9.9 million rate in May, according to data from Woodcliff Lake, New Jersey-based Autodata Corp.

Sales plunged 42 percent from a year earlier at Michigan-based Chrysler Group LLC, and dropped 34 percent at General Motors Corp, also based in Michigan.

The carmakers, two of the three biggest in the US, are restructuring through bankruptcy.

Excluding automobiles, retail sales probably rose 0.5 percent last month, matching the gain in the prior month, the Bloomberg survey said.


The Commerce Department’s report may also show receipts at service stations climbed, in part because of higher fuel prices. Regular unleaded gasoline averaged US$2.64 a gallon at the pump last month, up US$0.35 from the prior month, AAA said.

Oil costs also will be reflected in last month’s price reports due from the Labor Department. An index of producer prices, to be released tomorrow, and a gauge of consumer prices, due the next day, may show bigger gains compared with May, the survey showed.

Excluding food and energy, inflation remains contained, economists said.

Bargain-conscious consumers drove sales gains at chains that sell discounted goods, reports showed last week, including Framingham, Massachusetts-based TJX Cos, owner of TJ Maxx stores, and Pleasanton, California-based Ross Stores Inc, owner of the Ross Dress for Less chain.

The International Council of Shopping Centers, which said retail sales last month fell by 5.1 percent based on 32 chains, predicted this month’s results may show up to a 5 percent drop.


One area of the economy showing signs of bottoming out is housing.

A Commerce Department report due on Friday may show builders broke ground on houses at a 528,000 annual rate last month, after a 532,000 pace the prior month and compared with a record-low 454,000 in April, the survey median said.

Building permits, which point to future construction, likely rose.

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