Retail Sales in U.S. Probably Rose in October for Fourth Month

Retail sales in the U.S. probably rose in October for a fourth month, showing consumers are playing a bigger role in the recovery, economists said before a report today.

The projected 0.7 percent gain in purchases is based on the median estimate of 67 economists surveyed by Bloomberg News and would follow a 0.6 percent advance the prior month. Other figures today may show businesses boosted stockpiles, and manufacturing in the New York region expanded.

A 13 percent increase in stocks over the past two months and growing employment may keep lifting consumer spending, the biggest part of the economy, in coming months. At the same time, an unemployment rate hovering near 10 percent is prompting companies like J.C. Penney Co. and Wal-Mart Stores Inc. to use discounts to lure shoppers during the holiday season.

“Things have gotten incrementally better over the last year,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “The labor market has started to perk up, and you’ve had a pretty healthy performance in the stock market, which raises household wealth.”

The Commerce Department’s sales report is due at 8:30 a.m. in Washington. Economists’ estimates ranged from gains of 0.4 percent to 1.1 percent.

The last two months of the year are typically the biggest U.S. shopping season and hiring time for retailers. The National Retail Federation has forecast November-December holiday sales will rise by 2.3 percent from a year ago, the most since 2006.

Retailer Profits

J.C. Penney, the third-largest U.S. department-store company, last week said third-quarter profit rose 63 percent. Fourth-quarter sales at stores open at least a year will rise 3 percent to 4 percent, the Plano, Texas-based company said in a Nov. 12 statement, adding that the holiday shopping environment will “remain highly promotional.”

Investors have driven up retailers’ shares on signs of improving demand. The Standard & Poor’s Supercomposite Retailing Index of 91 companies, including J.C. Penney and Macy’s Inc., has gained 18 percent this year, compared with a 7.5 percent increase for the broader S&P 500 gauge. The 500 Index’s 13 percent advance from September through October was the best two- month performance in more than a year.

Shares rallied last month in anticipation of more action by the Federal Reserve to spur growth. Policy makers this month announced a plan to buy an additional $600 billion of Treasuries through June with the aim of reducing joblessness and averting a drop in prices that would hurt the recovery.

Obama’s View

President Barack Obama, whose Democratic Party this month lost control of the House of Representatives to Republicans, said last week that deflation poses a “huge danger” to the U.S. “We have to be mindful of those dangers going forward,” he told reporters in Seoul.

The Commerce Department figures may reflect gains in auto sales. Vehicles sold at a 12.25 million seasonally adjusted annual rate last month, the strongest performance since the government’s cash-for-clunkers program in August 2009, according to industry data.

The report may also show purchases excluding automobiles rose 0.4 percent, the same as in September, according to the survey median. Consumer spending accounts for about 70 percent of the U.S. economy.

The pace of job growth and Americans’ drive to pay down debt and boost savings may remain hurdles for retailers. Payrolls grew by 151,000 workers in October, the first gain in five months, and the unemployment rate held at 9.6 percent, the Labor Department said Nov. 5.

Long-Term Unemployment

Joblessness will average 9.3 percent in 2011, according to the median forecast of economists surveyed by Bloomberg this month.

The New York Fed’s so-called Empire State manufacturing report is due at 8:30 a.m. The bank’s index probably fell to 14 this month from 15.7 in October, according to the median forecast in the Bloomberg survey. Figures greater than zero signal expansion.

A report at 10 a.m. from the Commerce Department may show business inventories rose 0.8 percent in September after advancing 0.6 percent the prior month, according to the median forecast.

                        Bloomberg Survey

================================================================
                            Retail   Retail   Empire Business
                             Sales ex-autos    Manu.     Inv.
                              MOM%     MOM%    Index     MOM%
================================================================

Date of Release              11/15    11/15    11/15    11/15
Observation Period            Oct.     Oct.     Nov.    Sept.
----------------------------------------------------------------
Median                        0.7%     0.4%     14.0     0.8%
Average                       0.7%     0.4%     13.5     0.7%
High Forecast                 1.1%     0.7%     20.0     1.0%
Low Forecast                  0.4%     0.1%      7.5     0.2%
Number of Participants          67       61       46       44
Previous                      0.6%     0.4%     15.7     0.6%
----------------------------------------------------------------
4CAST Ltd.                    0.8%     0.6%     14.0     1.0%
ABN Amro Inc.                 0.7%     ---      14.0     ---
Action Economics              0.6%     0.6%     14.0     0.8%
Aletti Gestielle SGR          0.7%     0.5%     12.0     0.9%
Ameriprise Financial Inc      0.8%     0.4%     20.0     0.8%
Banesto                       0.6%     ---      14.8     0.6%
Bank of Tokyo- Mitsubishi     0.7%     0.4%     11.3     0.6%
Bantleon Bank AG              0.7%     0.5%     14.5     ---
Barclays Capital              0.7%     0.5%     12.0     0.6%
Bayerische Landesbank         0.6%     0.5%     ---      ---
BBVA                          0.8%     0.2%     14.0     0.5%
BMO Capital Markets           0.5%     0.3%     13.0     0.6%
BNP Paribas                   0.8%     0.4%     10.0     0.5%
Capital Economics             0.8%     0.6%     18.0     0.5%
CIBC World Markets            0.5%     0.2%     ---      ---
Citi                          0.7%     0.4%     ---      0.9%
ClearView Economics           0.8%     0.4%     10.0     0.7%
Commerzbank AG                1.0%     0.5%     12.0     1.0%
Credit Agricole CIB           0.8%     0.5%     13.0     1.0%
Credit Suisse                 0.7%     0.5%     ---      1.0%
DekaBank                      0.7%     0.5%     17.0     1.0%
Desjardins Group              0.5%     0.3%      7.5     1.0%
Deutsche Bank Securities      0.8%     0.5%     10.0     0.6%
Deutsche Postbank AG          0.7%     0.4%     ---      ---
DZ Bank                       1.0%     0.5%     17.0     ---
Exane                         0.8%     0.6%     12.5     ---
First Trust Advisors          1.0%     0.7%     18.0     0.9%
FTN Financial                 0.4%     0.2%     ---      ---
Helaba                        0.9%     0.4%     10.0     0.6%
HSBC Markets                  0.7%     0.3%     15.0     0.4%
Hugh Johnson Advisors         0.5%     0.4%     10.0     0.2%
IDEAglobal                    0.6%     0.5%     18.0     0.6%
Informa Global Markets        0.8%     0.5%     12.5     0.4%
ING Financial Markets         0.6%     0.4%     16.0     0.5%
Insight Economics             1.0%     0.3%     ---      0.9%
Intesa-SanPaulo               0.9%     0.6%     15.0     ---
Janney Montgomery Scott       1.1%     0.4%     ---      0.4%
Jefferies & Co.               0.8%     0.5%     13.0     0.6%
Landesbank Berlin             0.6%     0.3%     ---      0.8%
Landesbank BW                 0.6%     ---      16.5     ---
Mizuho Securities             0.5%     0.3%     12.0     0.9%
Moody’s Analytics             0.7%     0.4%     14.0     0.9%
Morgan Keegan & Co.           0.6%     0.4%     ---      0.6%
Morgan Stanley & Co.          1.0%     0.4%     ---      0.8%
Natixis                       0.9%     0.4%     ---      ---
Newedge                       0.6%     0.3%      9.0     ---
Nomura Securities Intl.       0.7%     0.3%     10.0     ---
Nord/LB                       0.7%     0.1%     14.0     ---
Pierpont Securities LLC       0.9%     0.5%     ---      ---
PNC Bank                      0.7%     0.5%     ---      0.9%
Raiffeisen Zentralbank        0.8%     0.6%     ---      ---
Raymond James                 0.6%     0.5%     ---      0.9%
RBC Capital Markets           0.7%     0.4%     17.0     ---
Scotia Capital                0.5%     0.4%     14.0     ---
Societe Generale              0.7%     0.3%     15.6     0.8%
Standard Chartered            0.8%     ---      14.0     ---
State Street Global Markets   0.7%     0.4%     14.8     0.8%
Stone & McCarthy Research     1.0%     0.7%      9.6     1.0%
TD Securities                 0.8%     0.5%     ---      ---
Thomson Reuters/IFR           0.7%     0.3%     12.0     1.0%
UniCredit Research            0.7%     ---      ---      ---
Union Investment              1.0%     ---      ---      ---
University of Maryland        0.6%     0.4%     ---      0.6%
Wells Fargo & Co.             0.6%     0.2%     ---      0.7%
WestLB AG                     0.7%     0.4%     13.0     ---
Westpac Banking Co.           0.9%     0.6%     10.0     0.5%
Wrightson ICAP                0.8%     0.5%     17.0     0.6%
================================================================

To contact the reporter responsible for this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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

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