U.S. Retail Sales Probably Rose in June, Helped by Discounts
Retail sales in the U.S. probably rose in June for the second straight month as price cuts brought shoppers back into stores, economists said before a report today.
Sales increased 0.4 percent after a 0.5 percent gain in May, according to the median estimate of 74 economists in a Bloomberg News survey. A separate report may show wholesale prices rose last month, reflecting higher fuel costs.
Consumers are seeking discounts at chains such as TJX Cos. and 99 Cents Only Stores or favoring necessities such as food and fuel over discretionary items. While the purchases are reinforcing forecasts for economic growth to resume this quarter, job losses and falling home values will weigh on household budgets and mute the recovery.
“We’re seeing more signs that consumer spending is stabilizing,” said James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. “Ultimately, we need to see improvement in the labor market to be confident that the spending gains will be sustained.”
The Commerce Department will release the retail sales data at 8:30 a.m. in Washington. Forecasts in the Bloomberg survey ranged from a gain of 1.2 percent to a decline of 1 percent.
Also at 8:30 a.m., the Labor Department may say prices paid to producers rose 0.9 percent in June, according to the survey median. Forecasts ranged from no change to a 1.8 percent gain.
Core Prices
Excluding food and fuel, so-called core producer prices probably rose 0.1 percent during the month. Compared with a year earlier, companies probably paid 5.2 percent less for goods, according to the survey, the biggest decrease since 1949.
Inflation will stay under control in coming months as tepid demand limits companies’ ability to raise costs for other items, economists said.
At the same time, government efforts to restore the flow of credit and prop up incomes, through tax cuts and Social Security payments from the Obama administration’s stimulus plan, are allowing consumers to spend even as they fret about jobs.
Today’s Commerce report may show retail sales excluding automobiles rose 0.5 percent.
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 fast cash advance.
Sales plunged 42 percent from a year earlier at Auburn Hills, Michigan-based Chrysler Group LLC, and dropped 34 percent at General Motors Corp., located in Detroit. The carmakers, two of the three biggest in the U.S., are restructuring after emerging from bankruptcy.
Gasoline Prices
The Commerce report today may also show receipts at service stations climbed, in part because of higher fuel prices. Regular unleaded gasoline averaged $2.64 a gallon at the pump in June, up 35 cents from the prior month, according to AAA.
June sales at stores open at least a year climbed at discounters such as Framingham, Massachusetts-based TJX, owner of T.J. Maxx and Marshalls stores, and Pleasanton, California- based Ross Stores Inc., owner of the Ross Dress for Less chain. Both companies raised their second-quarter profit projections.
Price-conscious customers also drove up sales in the quarter ended in June at City of Commerce, California-based 99 Cents, which sells groceries, electronics and health and beauty items.
“Many middle-to-upper-income consumers are coming into our stores for the first time for their household needs due to the recession,” Chief Executive Officer Eric Schiffer said in a July 9 statement.
Job Losses
The economy has lost 6.5 million jobs since the recession started in December 2007, the worst of any downturn since World War II, and gross domestic product contracted at a 5.5 percent annual rate in the first quarter, the third consecutive drop.
Growth will average 1.5 percent in the July-to-December period after another contraction in the second quarter, according to the median of 57 forecasts in a Bloomberg survey taken from July 2 to July 8. The jobless rate, meanwhile, will exceed 10 percent early next year and average 9.8 percent for 2010, the survey said.
Some retailers whose June sales fell more than analysts forecast included San Francisco-based Gap Inc., operator of the Old Navy and Banana Republic chains, and Abercrombie & Fitch Co., a teen-clothing retailer based in New Albany, Ohio.
The International Council of Shopping Centers predicted July retail sales will decline again following a drop in June.
Filed under: online by Wolf