Retail Sales in U.S. Probably Rose on Automobile Demand

Photographer: Tim Boyle/Bloomberg

Vehicle sales last month jumped to the fastest pace since February 2008 after slowing in the wake of Sandy’s destruction along the eastern seaboard. Close

Vehicle sales last month jumped to the fastest pace since February 2008 after slowing... Read More

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Photographer: Tim Boyle/Bloomberg

Vehicle sales last month jumped to the fastest pace since February 2008 after slowing in the wake of Sandy’s destruction along the eastern seaboard.

Sales at U.S. retailers probably rose in November as the holiday shopping season got under way and demand for automobiles rebounded after superstorm Sandy, economists said before a report this week.

The projected 0.4 percent gain would follow a 0.3 percent drop in October, according to the median forecast of 60 economists surveyed by Bloomberg before Dec. 13 figures from the Commerce Department. Other reports may show a gain in industrial production, while cheaper gasoline helped push down the cost of living.

Vehicle sales last month jumped to the fastest pace since February 2008 after slowing in the wake of Sandy’s destruction along the eastern seaboard. While job gains are helping sustain consumer spending, fiscal tightening slated for early next year threatens growth and may set back employment, one reason Federal Reserve policy makers will weigh increasing stimulus when they meet this week.

“A good holiday shopping season could be mitigated to some extent by the weakness observed early in the month,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC in New York. “The path of economic activity is suggestive to us that the Fed will continue to upsize” its stimulus programs.

Cars and light trucks sold in November at a 15.5 million annual rate, up from 14.2 million a month earlier when Sandy kept East Coast shoppers away during auto dealers’ busiest time of the month, according to Ward’s Automotive Group. Ford Motor Co. (F) deliveries of cars and light trucks climbed 6.4 percent and General Motors Co. (GM) sales gained 3.4 percent, the companies said Dec. 3.

Same-Store Sales

Other retailers may have had less success in bouncing back from early-month weakness related to Sandy. Same-store sales for the more than 20 companies tracked by Swampscott, Massachusetts- based Retail Metrics Inc. rose 1.6 percent, excluding drugstores, trailing the estimate for a 3.5 percent gain, the firm said Nov. 29. That followed a 5 percent increase in October.

Sales at Macy’s Inc. (M), the second-biggest U.S. department- store company, fell 0.7 percent, compared with the average projection for a 2.5 percent gain from analysts surveyed by the researcher Retail Metrics. Kohl’s Corp. (KSS) of Menomonee Falls, Wisconsin, said same-store sales fell 5.6 percent, trailing estimates for a 2.1 percent gain and prompting its biggest stock decline in two decades.

Building materials may have climbed in November amid rebuilding efforts along the East Coast, helping underpin overall retail sales. At the same time, cheaper gasoline may have held back service station receipts.

Cheaper Fuel

Lower fuel costs helped push down the November consumer price index by 0.2 percent, the most in six months, according to the median forecast in a Bloomberg survey before the Labor Department’s report on Dec. 14.

The average price of a gallon of gasoline was $3.44 in November, down from $3.70 in October, according to data from AAA, the largest U.S. motoring organization.

“The decline in gasoline prices is a notable positive for consumer spending,” said Dean Maki, chief U.S. economist in New York for Barclays Plc. “This is one of the ways in which the U.S. growth tends to remain resilient in the face of foreign recessions.”

While household spending is holding up, factories are struggling with limited corporate investment and slower overseas economies. Industrial production climbed 0.2 percent in November, failing to make up for the 0.4 percent drop the previous month, according to the median projection in a Bloomberg survey before the Fed’s Dec. 14 report.

Trade Deficit

Weaker overseas sales may have led to a wider U.S. trade deficit in October, economists project a Dec. 11 Commerce Department report to show.

Companies such as Starbucks Corp. (SBUX) indicate failure by lawmakers to avert the fiscal cliff of tax increases and spending cuts poses a threat to consumer spending.

“I think we’re highly, highly sensitive to the seismic change that could result in consumer confidence and consumer behavior by the unintended consequences that could happen as a result of the Congress and the administration not reaching a compromise and a long-term agreement,” Howard Schultz, chief executive officer of Starbucks, said at a Dec. 5 conference.

At the same time, Fed policy makers will consider at their two-day meeting this week whether more monetary stimulus is needed to provide a bigger boost the economy.

Fed officials will consider whether to supplement their $40 billion a month of mortgage bond purchases with Treasury buying, following the month-end expiration of the Operation Twist program to replace $667 billion of short-term debt with the same amount of longer-term bonds.

                      Bloomberg Survey

==============================================================
                        Release    Period    Prior     Median
Indicator                 Date               Value    Forecast
==============================================================
Trade Balance $ Blns     12/11      Oct.     -41.5     -42.5
Retail Sales MOM%        12/13      Nov.     -0.3%      0.4%
Retail ex-autos MOM%     12/13      Nov.      0.0%      0.0%
Retail exauto/gas MOM%   12/13      Nov.     -0.3%      0.3%
Retail control MOM%      12/13      Nov.     -0.1%      0.3%
CPI  MOM%                12/14      Nov.      0.1%     -0.2%
Core CPI MOM%            12/14      Nov.      0.2%      0.2%
CPI  YOY%                12/14      Nov.      2.2%      1.9%
Ind. Prod. MOM%          12/14      Nov.     -0.4%      0.2%
=============================================================

To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net

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

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