Retail sales probably stalled in September as Americans shied away from auto showrooms, indicating the economy was cooling ahead of the partial federal shutdown, economists said before reports this week.
Economists forecast no change in purchases, the worst reading in six months, after a 0.2 percent advance in August, according to the Bloomberg survey median ahead of Commerce Department figures due Oct. 29. Sales excluding motor vehicle dealers may have increased 0.4 percent in September, a sign other merchants had more success luring customers.
Faster hiring and wage growth are needed to spur demand that may have weakened further in October as the 16-day government shutdown caused consumer sentiment to falter. Other reports may show manufacturing cooled, job gains decelerated and inflation remained tame, giving the Federal Reserve reason to maintain stimulus at this week’s meeting.
“Consumers are spending at a slow pace,” said Gus Faucher, senior economist at PNC Financial Services Group Inc. in Pittsburgh. “We have an economy that is expanding, but handicapped by policy mistakes that cause consumers and businesses to be cautious.”
The September retail sales report, delayed because of the closing of the government at the beginning of the month, was originally scheduled for Oct. 11.
The reopening of the federal government has yet to reassure households, consumer confidence reports showed last week. At the same time, rising home values and stock-market gains are helping repair household finances.
The Standard and Poor’s Supercomposite Retailing Index has gained 34.5 percent since the start of this year, outpacing a 23.4 percent advance in the broader S&P 500 (SPX) gauge.
Vehicle sales probably weighed on total purchases in September. Cars and light trucks sold at a 15.2 million annual pace, down from an almost six-year high of 16 million the prior month, according to data from Ward’s Automotive Group. Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. reported U.S. sales declines last month, with tight supplies of some models after August’s surge and fewer weekend selling days.
General Motors Co. (GM) and Ford Motor Co. said earlier this month that the government shutdown posed a threat to an already slow economic recovery.
Some companies project demand to pick up in the November-December holiday shopping season. United Parcel Service Inc. (UPS), the world’s largest-package delivery company, said it expects daily shipping volumes to rise 8 percent during the peak shipping period between Thanksgiving and Christmas, led by growth in online shopping, according to an Oct. 25 statement.
“Looking to the fourth quarter, although some major retailers have expressed caution about holiday spending, they still expect robust online sales,” Kurt Kuehn, chief financial officer at UPS, said in a separate earnings release.
The Commerce Department’s retail sales data aren’t adjusted for prices, so cheaper fuel may have reduced receipts at filling stations in September. Regular gasoline at the pump sold at an average $3.51 a gallon last month, compared with $3.56 in August, according to AAA, the biggest U.S. auto group.
The lack of price pressures, including fuel, is keeping a lid on the cost of living. The consumer price index rose 1.2 percent in the 12 months ended September, the smallest year-over-year gain since April, according to the Bloomberg survey median. The measure rose 0.2 percent last month from August, economists forecast before the Labor Department report due on Oct. 30.
Fed policy makers, meeting Oct. 29 and Oct. 30, are trying to gauge the strength of the U.S. expansion as inflation holds below their long-term goal of 2 percent. The central bank will wait until its March 18-19 meeting to pare the monthly pace of asset buying to $70 billion from $85 billion, according to the median of 40 responses in a Bloomberg survey this month.
Other reports this week are projected to show manufacturing (IPMGCHNG) cooled in October and private employers slowed the pace of hiring. The Institute for Supply Management’s factory gauge, due Nov. 1, declined to 55 from a more than two-year high of 56.2 in September, according to the Bloomberg survey median. Readings greater than 50 signal growth.
Companies added 150,000 workers to payrolls this month after a 166,000 gain in September, economists forecast a report from ADP Research Institute in Roseland, New Jersey, will show on Oct. 30.
Fed data tomorrow may show industrial production advanced 0.4 percent in September, the same as in the prior month, according to the Bloomberg survey median. Manufacturing, which makes up 75 percent of total production, probably cooled after advancing in August by the most this year, economists said.
Bloomberg Survey =============================================================== Release Period Prior Median Indicator Date Value Forecast =============================================================== Ind. Prod. MOM% 10/28 Sept. 0.4% 0.4% Cap. Util. % 10/28 Sept. 77.8% 78.0% Manu. Prod. MOM% 10/28 Sept. 0.7% 0.3% Pending Homes MOM% 10/28 Sept. -1.6% 0.0% Pending Homes YOY% 10/28 Sept. 2.9% 3.5% Dallas Fed Monthly MOM% 10/28 Oct. 12.8% 9.0% Retail Sales MOM% 10/29 Sept. 0.2% 0.0% Retail ex-autos MOM% 10/29 Sept. 0.1% 0.4% Retail exauto/gas MOM% 10/29 Sept. 0.1% 0.5% Retail control MOM% 10/29 Sept. 0.2% 0.4% PPI MOM% 10/29 Sept. 0.3% 0.2% Core PPI MOM% 10/29 Sept. 0.0% 0.1% PPI YOY% 10/29 Sept. 1.4% 0.6% Core PPI YOY% 10/29 Sept. 1.1% 1.2% Case Shiller Monthly MO 10/29 Aug. 0.6% 0.6% Case Shiller Monthly YO 10/29 Aug. 12.4% 12.4% Business Inv. MOM% 10/29 Aug. 0.4% 0.3% Consumer Conf Index 10/29 Oct. 79.7 75.0 ADP Payroll ,000’s 10/30 Oct. 166 150 CPI MOM% 10/30 Sept. 0.1% 0.2% Core CPI MOM% 10/30 Sept. 0.1% 0.2% CPI YOY% 10/30 Sept. 1.5% 1.2% Core CPI YOY% 10/30 Sept. 1.8% 1.8% Core CPI SA Index 10/30 Sept. 234.302 234.700 CPI NSA Index 10/30 Sept. 233.877 234.073 Initial Claims ,000’s 10/31 26-Oct 350 340 Cont. Claims ,000’s 10/31 19-Oct 2874 2871 Chicago PM Index 10/31 Oct. 55.7 55.0 Markit Manu. PMI 11/1 Oct. 51.1 51.1 ISM Manu Index 11/1 Oct. 56.2 55.0 ISM Prices Index 11/1 Oct. 56.5 55.0 Vehicle Sales Mlns 11/1 Oct. 15.2 15.4 Domestic Vehicles Mlns 11/1 Oct. 11.7 11.8 =============================================================
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