Retail Sales in U.S. Probably Rose in July

Retail sales in the U.S. probably climbed in July by the most in four months as more Americans drove away from dealerships in new cars, economists said before a report this week.

The projected 0.5 percent gain in purchases would follow a 0.1 percent increase in June, according to the median forecast of 81 economists surveyed by Bloomberg News. Another report may show consumer confidence fell to the lowest level since March 2009, when the economy was last in a recession.

Retail purchases excluding auto dealers and gas stations may have failed to accelerate in July, underscoring the view of Federal Reserve policy makers that household spending has “flattened out.” Limited job growth, stagnant wages and a more pessimistic consumer may keep hindering an economy that barely grew in the first half of the year.

“Car sales are inching back up from the weakness of the second quarter,” said Paul Ballew, chief economist at Nationwide Mutual Insurance Co. in Columbus, Ohio. “You take autos out, and we’ll probably be very slightly up. We’re not expecting a strong bounce-back in consumer spending any time soon.”

The Commerce Department will report the sales data at 8:30 a.m. in Washington. Economists’ estimates ranged from gains of 0.1 percent to 1.5 percent. Sales excluding autos climbed 0.3 percent after no change the prior month, according to the median forecast. Purchases minus gasoline and vehicles are projected to increase 0.2 percent for a fourth straight month.

August Confidence

The Thomson Reuters/University of Michigan preliminary index of sentiment for August dropped to 62 from 63.7, according to the median projection before the 9:55 a.m. report. The confidence index averaged 64.2 during the 18-month recession that ended in June 2009.

Unemployment at 9 percent or higher for the past four months, slumping stock prices and a divisive debt-ceiling debate that prompted a downgrade of U.S. debt from its top rating have left Americans with little to cheer. Since July 22, the Standard & Poor’s 500 Index has fallen 13 percent. The gauge dropped in 11 of the past 14 days.

“Although the economy has clearly lost some momentum, we do believe that it will continue to recover, but more gradually than we had originally anticipated as we move through the second half of the year,” Don Johnson, General Motors Co.’s vice president of U.S. sales, said on an Aug. 2 conference call. Moderating gas prices have “provided some needed relief to consumers.”

Vehicle Purchases

Cars and light trucks sold at a seasonally adjusted pace of 12.2 million in July, up from 11.4 million in June yet trailing the 12.5 million average pace through the first half, Autodata Corp. said on Aug. 2. Deliveries at Detroit-based GM climbed 7.6 percent from the same month in 2010.

Retailers, including Macy’s Inc. and Limited Brands Inc., reported July same-store sales that exceeded analysts’ estimates. Purchases at Macy’s rose 5 percent, surpassing the 4.4 percent average projection compiled by Retail Metrics Inc. Limited, operator of the Victoria’s Secret chain, posted a gain of 6 percent from a year earlier.

The economy expanded at a 1.3 percent annual rate in the second quarter, less than forecast, after growing at a 0.4 percent pace in the first three months of the year, Commerce Department figures showed last month. Household spending rose at 0.1 percent pace last quarter, the weakest since the same period in 2009.

Fed policy makers on Aug. 9 said economic growth this year had been “considerably slower” than expected. What’s more, “temporary factors,” including Japan’s disaster and high fuel costs, likely accounted for “only some of the recent weakness in economic activity,” they said.

                        Bloomberg Survey

================================================================
                            Retail  Retail Retail ex U of Mich
                             Sales ex-autos auto/gas    Conf.
                              MOM%     MOM%     MOM%    Index
================================================================

Date of Release              08/12    08/12    08/12    08/12
Observation Period            July     July     July   Aug. P
----------------------------------------------------------------
Median                        0.5%     0.3%     0.2%     62.0
Average                       0.6%     0.3%     0.3%     62.4
High Forecast                 1.5%     1.6%     1.8%     66.5
Low Forecast                  0.1%    -0.2%    -0.2%     59.0
Number of Participants          81       71       24       69
Previous                      0.1%     0.0%     0.2%     63.7
----------------------------------------------------------------
4CAST                         0.1%     0.2%     ---      63.0
ABN Amro                      0.4%     ---      ---      62.0
Action Economics              0.4%     0.2%     ---      60.0
Aletti Gestielle              0.3%     0.3%     0.4%     63.0
Ameriprise Financial          0.4%     0.3%     0.3%     64.0
Banesto                       0.5%     ---      ---      62.0
Barclays Capital              0.6%     0.3%     0.1%     62.0
Bayerische Landesbank         0.2%     0.0%     ---      63.0
BBVA                          0.3%     ---      ---      62.0
BMO Capital Markets           0.6%     0.3%     ---      63.0
BNP Paribas                   0.5%     0.3%     ---      63.0
BofA Merrill Lynch            0.7%     0.2%     ---      62.5
Briefing.com                  1.0%     0.7%     ---      62.0
Capital Economics             0.8%     0.6%     ---      60.0
CIBC World Markets            0.5%     0.1%     ---      ---
Citi                          0.7%     0.4%     ---      61.0
ClearView Economics           0.3%     0.2%     ---      64.0
Commerzbank AG                0.6%     0.3%     ---      65.0
Credit Agricole CIB           0.6%     0.2%     ---      63.7
Credit Suisse                 0.5%     0.3%     0.3%     59.0
Daiwa Securities America      0.3%     0.2%     ---      65.0
DekaBank                      0.4%     0.0%     ---      61.0
Desjardins Group              0.5%     0.2%     ---      64.0
Deutsche Bank Securities      0.6%     0.4%     ---      59.0
Deutsche Postbank AG          0.5%     0.2%     ---      64.5
DZ Bank                       0.4%     0.1%     ---      62.0
Exane                         0.6%     0.3%     ---      64.0
Fact & Opinion Economics      0.9%     0.2%     ---      62.0
First Trust Advisors          0.7%     0.1%     ---      60.0
FTN Financial                 0.4%     0.2%     ---      61.0
Goldman, Sachs & Co.          0.4%     0.1%     0.2%     ---
Helaba                        0.7%     0.4%     ---      63.0
High Frequency Economics      0.7%     0.4%     ---      60.0
HSBC Markets                  0.6%     0.3%     0.4%     66.5
Hugh Johnson Advisors         0.5%     0.2%     ---      60.0
IDEAglobal                    0.4%     0.2%     ---      65.0
IHS Global Insight            0.6%     0.3%     ---      59.0
Informa Global Markets        0.7%     0.4%     ---      62.0
ING Financial Markets         0.8%     0.4%     0.3%     60.0
Insight Economics             0.9%     0.3%     ---      65.0
Intesa-SanPaulo               0.4%     0.1%     ---      63.0
J.P. Morgan Chase             0.9%     0.5%     0.1%     63.5
Janney Montgomery Scott       0.6%     0.1%     0.1%     ---
Jefferies & Co.               0.8%     0.4%     ---      59.0
Landesbank Berlin             0.5%     0.1%     ---      61.7
Landesbank BW                 0.6%     ---      ---      65.0
Manulife Asset Management     0.3%     0.0%     ---      63.0
Market Securities             0.7%     ---      ---      ---
MF Global                     0.3%     0.0%    -0.1%     60.5
Moody’s Analytics             0.6%     0.3%     ---      60.0
Morgan Keegan & Co.           0.4%     0.2%     ---      ---
Morgan Stanley & Co.          0.7%     0.3%     0.1%     ---
National Bank Financial       0.4%     0.2%     ---      63.0
Natixis                       0.4%     0.1%     ---      62.0
Newedge                       0.3%     0.2%     ---      61.0
Nomura Securities             0.9%     0.4%     0.2%     ---
Nord/LB                       0.5%     0.3%     ---      64.0
OSK Group/DMG                 0.8%     0.1%     ---      ---
Parthenon Group               1.5%     1.6%     1.8%     63.2
Pierpont Securities           0.9%     0.6%     ---      62.0
PineBridge Investments        0.2%     ---      0.4%     62.0
PNC Bank                      0.4%     0.3%     ---      ---
Raiffeisenbank International  0.4%     0.0%     ---      66.0
Raymond James                 0.5%     0.3%     0.2%     62.5
RBC Capital Markets           0.8%     0.4%     0.3%     62.0
RBS Securities                0.7%     0.5%     0.3%     63.0
Scotia Capital                0.7%     0.2%     ---      ---
SMBC Nikko Securities         0.6%     0.4%     ---      62.0
Societe Generale              0.8%     0.2%    -0.2%     60.5
Standard Chartered            0.3%     ---      0.2%     64.0
State Street Global Markets   0.6%     0.3%     0.2%     60.9
Stone & McCarthy Research     0.6%     0.4%     ---      64.0
TD Securities                 0.3%    -0.1%     0.0%     62.0
UBS                           0.7%     0.5%     0.2%     62.5
UniCredit Research            0.8%     ---      ---      ---
Union Investment              0.3%     ---      ---      63.4
University of Maryland        0.4%     0.3%     ---      63.0
Wells Fargo & Co.             0.1%    -0.2%     ---      ---
WestLB AG                     0.4%     0.2%     ---      63.5
Westpac Banking Co.           0.4%     ---      0.2%     62.0
Wrightson ICAP                0.8%     0.4%     0.1%     61.0
================================================================

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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

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