US re­tail sales dropped in Oct

The Pak Banker - - Front Page -

NEW YORK

Sales at US re­tail­ers prob­a­bly fell in Oc­to­ber for the first time in four months as con­sumers in the North­east stayed away from auto deal­ers and shop­ping cen­ters be­fore and af­ter su­per­storm Sandy, economists said be­fore a re­port this week.

The pro­jected 0.2 per­cent drop in pur­chases would fol­low a 1.1 per­cent gain in Septem­ber, ac­cord­ing to the me­dian fore­cast of 72 economists sur­veyed by Bloomberg be­fore Nov. 14 fig­ures from the Com­merce Depart­ment. Other re­ports may show the cost of liv­ing climbed more slowly and fac­tory out­put rose.

Gen­eral Mo­tors Co. (GM) and Ford Mo­tor Co. (F) are among com­pa­nies say­ing the drop in de­mand will prob­a­bly be tem­po­rary as brighter job prospects, ris­ing home prices and im­prov­ing fi­nances boost house­hold con­fi­dence head­ing into the hol­i­day shop­ping sea­son. Sus­tained gains in con­sumer spend­ing, which ac­counts for about 70 per­cent of the econ­omy, are needed to over­come a slow­down in busi­ness in­vest­ment.

"As long as the la­bor-mar­ket re­cov­ery is on­go­ing, then we're go­ing to see un­re­mark­able, but steady, growth in con­sumer spend­ing," said Guy Berger, a U.S. econ­o­mist at RBS Se­cu­ri­ties Inc. in Stam­ford, Con­necti­cut. "Con­sumers are feel­ing bet­ter." The slow­down comes af­ter re­tail sales in Septem­ber and Au­gust marked the best back-to-back show­ing since late 2010.

Grow­ing con­fi­dence may be play­ing a role. The Thomson Reuters/Univer­sity of Michi­gan con­sumer sen­ti­ment gauge climbed to a five-year high this month, a re­port last week showed.

Part of that jump in pur­chases was the re­sult of house­holds snap­ping up Ap­ple Inc.'s new iPhone 5. Sup­port also came from car and light truck sales, which climbed in Septem­ber to a 14.9 mil­lion pace, the fastest in more than four years, ac­cord­ing to fig­ures from Ward's Au­to­mo­tive Group.

Those gains weren't re­peated in Oc­to­ber, when Sandy, the big­gest At­lantic storm in his­tory, pre­vented po­ten­tial shop­pers from get­ting to stores. Auto de­mand dropped to a 14.2 mil­lion pace last month af­ter Sandy slammed the East Coast dur­ing the auto in­dus­try's busiest time of the month. Car­mak­ers have said those sales should be made up by the end of the year.

Some re­tail­ers re­ported a pickup in Oc­to­ber de­mand even with the ad­verse weather. Same-store sales at Macy's Inc., the sec­ond-big­gest U.S. depart­ment-store chain, rose 4.1 per­cent, top­ping the 4 per- cent av­er­age es­ti­mate of an­a­lysts sur­veyed by Re­tail Met­rics Inc. Kohl's Corp.'s same-store sales climbed 3.3 per­cent, beat­ing es­ti­mates for a 0.8 per­cent gain.

The storm also didn't af­fect all re­tail­ers the same way. Stock­pil­ing be­fore Sandy struck prob­a­bly boosted sales at gro­cery, drug and home-im­prove­ment stores, just as it hurt de­mand at depart­ment stores and mer­chants in malls, ac­cord­ing to economists at Mor­gan Stan­ley in New York. Economists project the re­tail sales cat­e­gory used to cal­cu­late gross do­mes­tic prod­uct, which ex­cludes auto deal­ers, build­ing-ma­te­rial stores and ser­vice sta­tions, will show a 0.4 per­cent gain in Oc­to­ber fol­low­ing a 0.9 per­cent in­crease the prior month.

The Con­sumer Dis­cre­tionary Se­lect Sec­tor SPDR Fund (XLY), which in­cludes com­pa­nies like Tif­fany & Co. and Best Buy Co., has climbed about 16 per­cent this year, as spend­ing has ad­vanced. Gains in house­hold pur­chases will also help man­u­fac­tur­ing, which is re­ceiv­ing fewer or­ders from busi­ness in­vest­ment cools and economies in Europe and Asia slow. Out­put at the na­tion's fac­to­ries, mines and util­i­ties prob­a­bly rose 0.2 per­cent in Oc­to­ber af­ter a 0.4 per­cent gain the pre­vi­ous month, economists fore­cast a Fed­eral Re­serve re­port will show on Novem­ber 16.

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