Retail Sales in U.S. Likely Cooled in August

Retail sales in the U.S. probably rose in August at the slowest pace in three months as a lack of jobs restrained shoppers, economists said before a report today.

The 0.2 percent rise would follow a 0.5 percent increase in July, according to the median forecast of 83 economists surveyed by Bloomberg News. A separate report may show inflation at the wholesale level cooled last month.

Chains like J.C. Penney Co. and Target Corp. (TGT) are among those saying a stagnant labor market that’s battered confidence is hurting sales. The dim outlook for household spending, which accounts for about 70 percent of the economy, means it will be harder for the two-year old economic recovery to gain speed.

“Consumers are not spending all that much,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. “People are nervous about the economic recovery and they’re stretched for money.”

The Commerce Department’s sales figures are due at 8:30 a.m. in Washington. Economists’ estimates ranged from a gain of 0.7 percent to a decline of 0.5 percent.

Also at 8:30 a.m., a report from the Labor Department will show the producer price index was unchanged in August after rising 0.2 percent in July, according to the survey median. Core prices, which exclude volatile food and fuel costs, may have climbed 0.2 percent from the prior month and 2.6 percent from July 2010, economists forecast.

The retail report may also show purchases excluding automobiles rose 0.2 percent after increasing 0.5 percent in July, economists said. The auto industry is trying to recover from supply disruptions caused by Japan’s earthquake in March, which hurt production, availability and sales.

Auto Sales

Cars and light trucks sold at a 12.1 million seasonally adjusted annual rate in August, down from a 12.5 million pace in the first half of the year and little changed from July, according to researcher Autodata Corp.

Spending on so-called big-ticket items such as cars and appliances is threatened by a lack of job growth. Payrolls in the world’s largest economy stagnated last month and unemployment held at 9.1 percent, Labor Department figures showed earlier this month.

The risk of a broader pullback in the economy has increased pressure on the Federal Reserve, Obama administration and Congress to step up efforts to spur the economy.

Obama’s Jobs Plan

A plan from President Barack Obama, announced before a joint session of Congress on Sept. 8, called for an extension of a payroll-tax break for Americans and unemployment assistance. He also pushed for a payroll tax break for small businesses, an increase in infrastructure spending and more aid for cash- strapped state governments.

Sales gains at Target, the second-largest U.S. discount retailer, are “a bit more challenging” than expected at the beginning of the year, according to executives.

“What we’re experiencing now is what we expect for quite some time,” Douglas Scovanner, chief financial officer of Minneapolis-based Target, said at a Sept. 8 conference. “This is a challenging environment.”

Plano, Texas-based J.C. Penney, like other retailers, is seeing less mall traffic and more cautious consumer spending on non-essential products, according to Chief Executive Officer Myron Ullman.

“Everybody wishes the economy were better, the job growth, real income growth and the things that drive the economy were more vibrant,” he said in a Sept. 7 conference presentation. “The upper-income customer, with more exposure to the stock market, has been more enthusiastic about discretionary spending and the bottom quartile customer has had to make it work with high unemployment and gas prices and food prices.”

Retailer Shares

The Standard & Poor’s Supercomposite Retailing Index has fallen 6.9 percent since July 15, while the broader S&P 500 Index (SPX) declined 11 percent during the same period.

Building materials and garden supply stores may have gotten a boost in August as many communities along the East coast prepared for Hurricane Irene and made repairs in its aftermath, according to economists including Patrick Newport of IHS Global Insight in Lexington, Massachusetts.

Fed Chairman Ben S. Bernanke last week cited high unemployment, slow wage gains, falling home prices and still- high debt burdens as constraints on Americans and reiterated that price pressures were tame.

“One striking aspect of the recovery is the unusual weakness in household spending,” Bernanke told the Economic Club of Minnesota on Sept. 8. “We see little indication that the higher rate of inflation experienced so far this year has become ingrained in the economy.”

                         Bloomberg Survey

================================================================
                               PPI     Core   Retail   Retail
                                        PPI    Sales ex-autos
                              MOM%     MOM%     MOM%     MOM%
================================================================

Date of Release              09/14    09/14    09/14    09/14
Observation Period            Aug.     Aug.     Aug.     Aug.
----------------------------------------------------------------
Median                        0.0%     0.2%     0.2%     0.2%
Average                       0.0%     0.2%     0.2%     0.2%
High Forecast                 0.9%     0.4%     0.7%     1.0%
Low Forecast                 -0.6%     0.0%    -0.5%    -0.3%
Number of Participants          77       73       83       73
Previous                      0.2%     0.4%     0.5%     0.5%
----------------------------------------------------------------
4CAST                         0.4%     0.2%     0.4%     0.3%
ABN Amro                      0.0%     0.2%     0.1%     ---
Action Economics             -0.1%     0.0%     0.2%     0.2%
Aletti Gestielle             -0.3%     0.1%     0.2%     0.3%
Ameriprise Financial         -0.1%     0.2%    -0.2%    -0.2%
Bank of Tokyo- Mitsubishi     0.0%     0.2%     0.5%     0.5%
Bantleon Bank AG             -0.3%     ---      0.3%     0.2%
Barclays Capital             -0.1%     0.2%     0.3%     0.4%
Bayerische Landesbank         ---      ---      0.2%     0.2%
BBVA                          0.0%     0.2%     0.2%     0.3%
BMO Capital Markets          -0.2%     0.1%     0.2%     0.2%
BNP Paribas                  -0.1%     0.2%     0.3%     0.3%
BofA Merrill Lynch           -0.2%     0.2%     0.2%     0.2%
Briefing.com                 -0.1%     0.2%    -0.5%    -0.2%
Capital Economics             0.4%     0.2%     0.2%     0.3%
CIBC World Markets            ---      ---      0.1%     0.0%
Citi                          0.0%     0.2%     0.4%     0.4%
ClearView Economics          -0.2%     0.1%     0.3%     0.3%
Comerica                     -0.5%     0.3%     0.2%     0.2%
Commerzbank AG               -0.4%     0.2%     0.2%     0.3%
Credit Agricole CIB           0.1%     0.2%     0.2%     0.2%
Credit Suisse                -0.4%     0.1%     0.3%     0.4%
Daiwa Securities America      0.3%     0.2%     0.2%     0.3%
DekaBank                      0.2%     0.2%     0.4%     0.4%
Desjardins Group              0.2%     0.3%     0.3%     0.1%
Deutsche Bank Securities      0.3%     0.2%     0.3%     0.4%
Deutsche Postbank AG         -0.2%     0.2%     0.2%     0.3%
DZ Bank                      -0.1%     0.2%     0.2%     0.2%
Exane                         0.0%     0.2%     0.1%     0.2%
Fact & Opinion Economics     -0.1%     0.2%     0.2%     0.1%
First Trust Advisors         -0.1%     0.2%    -0.3%     0.0%
FTN Financial                 0.0%     0.2%    -0.1%    -0.1%
Goldman, Sachs & Co.          0.0%     0.2%     0.3%     0.4%
Helaba                       -0.1%     0.1%     0.2%     0.2%
High Frequency Economics     -0.5%     0.2%     0.5%     0.5%
HSBC Markets                  0.0%     0.2%     0.2%     ---
Hugh Johnson Advisors        -0.3%     0.2%     0.3%     0.3%
IDEAglobal                   -0.2%     0.1%     0.2%     0.1%
IHS Global Insight            0.2%     0.3%     0.3%     0.4%
Informa Global Markets       -0.2%     0.1%     0.0%     0.0%
ING Financial Markets        -0.2%     0.1%     0.4%     0.6%
Insight Economics             0.0%     0.2%     0.1%     0.3%
Intesa-SanPaulo               0.0%     0.2%     0.2%     0.4%
J.P. Morgan Chase             0.0%     0.2%     0.4%     0.5%
Janney Montgomery Scott      -0.2%     0.1%     0.2%     0.3%
Jefferies & Co.               0.0%     0.2%     0.2%     0.2%
Landesbank Berlin             0.3%     0.2%     0.0%     0.1%
Landesbank BW                -0.1%     ---      0.3%     ---
Manulife Asset Management    -0.3%     0.1%     0.0%     0.0%
Market Securities             0.1%     0.2%    -0.1%     ---
MET Capital Advisors          0.2%     ---      0.5%     ---
MF Global                     0.1%     0.2%     0.5%     0.6%
Mizuho Securities             0.0%     0.1%     0.3%     0.1%
Moody’s Analytics            -0.2%     0.2%    -0.2%    -0.3%
Morgan Keegan & Co.          -0.2%     0.2%     0.2%     0.2%
Morgan Stanley & Co.          0.1%     0.1%     0.1%     0.5%
National Bank Financial       ---      ---     -0.1%     0.0%
Natixis                       0.0%     0.2%    -0.2%     0.0%
Nomura Securities             0.5%     0.4%     0.7%     ---
OSK Group/DMG                 ---      ---      0.2%     0.2%
Parthenon Group               0.3%     0.2%     0.6%     0.6%
Pierian Capital               0.0%     0.2%     0.1%     0.1%
Pierpont Securities           0.2%     0.2%     0.3%     0.4%
PineBridge Investments       -0.1%     0.3%     0.0%     ---
PNC Bank                     -0.2%     0.3%     0.2%     0.3%
Raymond James                 0.0%     0.2%     0.3%     0.4%
RBC Capital Markets           0.2%     0.2%     0.2%     0.2%
RBS Securities               -0.6%     0.1%     0.3%     0.4%
Scotia Capital                ---      ---     -0.1%    -0.1%
SMBC Nikko Securities         0.2%     0.2%    -0.3%    -0.3%
Societe Generale              0.9%     0.3%     0.7%     1.0%
Standard Chartered           -0.3%     0.2%    -0.2%     ---
State Street Global Markets   0.1%     0.2%     0.2%     0.3%
Stone & McCarthy Research     0.2%     0.2%     0.4%     0.4%
TD Securities                -0.2%     0.2%     0.1%    -0.1%
UBS                           0.1%     0.2%     0.3%     0.4%
UniCredit Research            ---      ---      0.3%     ---
Union Investment              0.1%     ---      0.3%     ---
University of Maryland       -0.2%     0.1%     0.2%     0.2%
Wells Fargo & Co.             0.0%     0.2%     0.1%     0.1%
WestLB AG                    -0.1%     0.2%     0.2%     0.2%
Westpac Banking Co.          -0.2%     0.1%    -0.2%    -0.2%
Wrightson ICAP                0.3%     0.3%     0.1%     0.2%
================================================================

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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