Retail Sales in U.S. Probably Rose at Slower Pace as Fuel Costs Increased

Retail sales probably climbed at a slower pace in March, indicating higher costs for fuel and food are straining paychecks.

The projected 0.5 percent gain would follow a 1 percent increase in February, according to the median forecast of 81 economists surveyed by Bloomberg News. A separate report may show companies continued to build inventories.

Mounting gasoline and grocery bills are eroding confidence and pinching wallets, making it likely consumer spending, the biggest part of the economy, cooled in the first quarter from the final three months of 2010. At the same time, declining unemployment and a cut in payroll taxes for 2011 may help chains like Macy’s Inc. (M) and Saks Inc. (SKS) sustain sales.

“Consumers are paying more for food and gasoline, and that’s sapping demand for other goods,” said Conrad DeQuadros, a senior economist at RDQ Economics LLC in New York. “There are signs of a fairly substantial slowing in first-quarter real consumer spending, but we’re not convinced that softness will continue. While rising prices are a headwind, the improvement in the labor market is providing an offset.”

The Commerce Department’s sales figures are due at 8:30 a.m. in Washington. Economists’ estimates ranged from a gain of 2 percent to a drop of 0.5 percent.

At 10 a.m., another report from the Commerce Department may show business inventories grew 0.8 percent in February after a 0.9 percent gain the prior month, according to the survey median.

Fed’s View

The Federal Reserve’s Beige Book survey, due at 2 p.m., will provide an update on the state of the economy. Fed officials noted in minutes of their March 15 meeting that “while participants expected that household spending would continue to expand, the pace of expansion was uncertain.”

Higher gasoline prices contributed to the projected gain in retail sales, which include purchases at filling stations and aren’t adjusted for inflation.

The cost of regular fuel averaged $3.54 a gallon in March, up from $3.18 the prior month, according to AAA, the nation’s biggest motoring organization. The price jumped to $3.79 a gallon on April 11, the highest since September 2008.

Industry reports last week showed stores fared better than forecast. Retailers’ sales at stores open at least a year rose 2.2 percent from March 2010, while the average projection was for a 0.5 percent drop, according to Retail Metrics Inc. Analysts projected a decrease because an earlier Easter in 2010 had pulled sales into March that would normally have taken place in April.

Beating Estimates

Cincinnati-based Macy’s, the second-largest U.S. department-store chain, reported same-store sales rose, while analysts forecast a decline. Luxury retailers Saks, Nordstrom Inc. (JWN) and Neiman Marcus Group Inc. also topped estimates.

The Standard & Poor’s Supercomposite Retailing Index has risen 3.8 percent this year through April 12, while the broader S&P 500 advanced 4.5 percent.

Retail sales excluding automobiles and service stations rose 0.5 percent in March after climbing 0.6 percent in February, economists said in the survey.

Industrywide light-vehicle sales ran at a seasonally adjusted annual rate of 13.1 million in March, down from 13.4 million the prior month, according to researcher Autodata Corp.

Nonetheless, auto demand has improved from last year. Sales at Dearborn, Michigan-based Ford Motor Co. (F) climbed 16 percent in March from the same time in 2010, outpacing Detroit-based General Motors Co. (GM)’s 9.6 percent gain.

More Jobs

“We continue to see good, solid signs of progress despite some of the challenges,” Don Johnson, GM’s vice president of U.S. sales operations, said on an April 1 conference call. “A recovering job market is going to be the most important factor for the U.S. economy at this stage, and we do anticipate that this is going to continue to improve.”

The economy created 216,000 jobs in March, the most since May 2010, while the jobless rate fell for a fourth straight month to a two-year low of 8.8 percent, Labor Department data showed April 1.

Wal-Mart Stores Inc. (WMT), the world’s biggest retailer, is among chains saying customers are feeling the pinch from rising fuel expenses.

“We still see our customer financially strapped,” Rosalind Brewer, president of the Bentonville, Arkansas-based company’s Wal-Mart East division, said in an investor presentation on April 12. We see the shopper’s “wallet being stretched a lot more.”

                         Bloomberg Survey

==============================================================
                            Retail   Retail Retail ex Business
                             Sales ex-autos auto/gas     Inv.
                              MOM%     MOM%     MOM%     MOM%
==============================================================
Date of Release              04/13    04/13    04/13    04/13
Observation Period           March    March    March     Feb.
--------------------------------------------------------------
Median                        0.5%     0.7%     0.5%     0.8%
Average                       0.6%     0.8%     0.5%     0.8%
High Forecast                 2.0%     1.8%     1.0%     1.1%
Low Forecast                 -0.5%    -0.1%    -0.2%     0.5%
Number of Participants          81       71       23       48
Previous                      1.0%     0.7%     0.6%     0.9%
--------------------------------------------------------------
4CAST Ltd.                    0.2%     0.6%     ---      ---
ABN Amro                      0.6%     ---      ---      ---
Action Economics              0.6%     0.8%     ---      0.9%
Aletti Gestielle              0.5%     0.8%     0.3%     0.8%
Ameriprise Financial          0.6%     1.0%     0.3%     0.8%
Banesto                       0.5%     ---      ---      1.0%
Bank of Tokyo- Mitsubishi     0.7%     1.1%     ---      0.8%
Bantleon Bank AG              0.5%     0.7%     ---      ---
Barclays Capital              0.5%     0.7%     0.5%     0.7%
Bayerische Landesbank         0.6%     1.0%     ---      ---
BBVA                          0.5%     0.7%     ---      0.7%
BMO Capital Markets           0.4%     0.7%     ---      0.8%
BNP Paribas                   0.6%     0.7%     ---      0.8%
BofA Merrill Lynch            0.5%     0.9%     ---      0.7%
Briefing.com                  0.6%     0.8%     ---      0.8%
Capital Economics             0.7%     1.1%     ---      0.9%
CIBC World Markets            0.6%     0.8%     ---      ---
Citi                          0.4%     0.8%     ---      0.8%
Commerzbank AG                0.8%     1.2%     ---      0.9%
Credit Agricole CIB           0.5%     0.7%     ---      0.7%
Credit Suisse                 0.3%     0.5%     0.1%     0.8%
Daiwa Securities America      0.0%     0.2%     ---      ---
Danske Bank                   0.7%     1.2%     0.9%     ---
DekaBank                      0.4%     0.6%     0.5%     0.8%
Desjardins Group              0.4%     0.7%     ---      0.5%
Deutsche Bank Securities      0.8%     1.0%     ---      1.0%
Deutsche Postbank AG          0.5%     0.6%     ---      ---
DZ Bank                       0.5%     0.8%     ---      ---
Fact & Opinion Economics      0.7%     0.9%     ---      1.0%
First Trust Advisors          0.5%     0.7%     ---      0.8%
FTN Financial                 0.6%     0.8%     ---      ---
Goldman, Sachs                0.7%     1.0%     ---      ---
Helaba                        0.4%     0.5%     ---      0.8%
High Frequency Economics      1.0%     1.0%     ---      0.7%
HSBC Markets                  0.6%     0.9%     0.6%     ---
Hugh Johnson Advisors         0.4%     0.6%     ---      0.6%
IDEAglobal                    0.6%     0.8%     ---      1.0%
IHS Global Insight            0.7%     1.1%     ---      ---
Informa Global Markets        0.7%     0.9%     0.3%     0.9%
ING Financial Markets         0.3%     0.6%     0.4%     ---
Insight Economics             0.4%     0.6%     ---      0.7%
Intesa-SanPaulo               0.5%     0.6%     ---      ---
ITG Investment Research       0.4%     0.6%     0.3%     ---
J.P. Morgan Chase             0.6%     0.9%     0.6%     0.9%
Janney Montgomery Scott       0.9%     1.1%    -0.2%     0.7%
Jefferies & Co.               0.4%     0.8%     ---      0.8%
Landesbank Berlin             0.9%     1.0%     ---      1.0%
Landesbank BW                 0.3%     ---      ---      ---
Manulife Asset Management     0.5%     0.7%     ---      1.0%
MET Capital Advisors          2.0%     ---      ---      ---
MF Global                     0.5%     0.7%     0.6%     0.7%
Mizuho Securities             0.4%     0.4%     ---      1.1%
Moody’s Analytics             0.5%     0.7%     ---      0.7%
Morgan Keegan & Co.           0.4%     0.6%     ---      0.7%
Morgan Stanley & Co.          0.5%     0.9%     0.7%     0.7%
National Bank Financial       0.7%     0.8%     ---      ---
Natixis                       0.5%     0.7%     ---      ---
Newedge                       0.4%     0.6%     ---      ---
Nomura Securities             0.4%     ---      ---      0.7%
Nord/LB                      -0.5%    -0.1%     ---      ---
OSK Group/DMG                 0.7%     0.8%     ---      ---
Parthenon Group               0.5%     0.6%     0.3%     ---
Pierpont Securities           0.4%     0.5%     ---      ---
PineBridge Investments        0.7%     ---      0.3%     0.5%
PNC Bank                      0.2%     0.5%     ---      0.7%
Raiffeisenbank International  0.7%     0.8%     ---      ---
Raymond James                 0.5%     0.7%     0.5%     0.7%
RBC Capital Markets           0.5%     0.9%     0.7%     ---
RBS Securities Inc.           0.4%     0.7%     ---      ---
Scotia Capital                0.6%     0.6%     ---      ---
Societe Generale              1.2%     1.8%     ---      ---
Standard Chartered            0.8%     ---      0.4%     ---
State Street Global Markets   ---      ---      ---      0.9%
Stone & McCarthy Research     0.3%     0.7%     0.7%     0.7%
TD Securities                 0.5%     0.7%     0.4%     0.7%
UBS                           0.6%     1.0%     1.0%     0.7%
UniCredit Research            0.3%     ---      ---      ---
Union Investment              0.9%     ---      ---      ---
University of Maryland        0.5%     0.6%     ---      0.9%
Wells Fargo & Co.             1.2%     1.3%     ---      0.9%
Westpac Banking Co.           0.3%     ---      ---      ---
Wrightson ICAP                0.4%     0.7%     0.6%     0.7%
==============================================================

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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

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