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Retail Sales Probably Rose in December: U.S. Economy Preview

Retail Sales Probably Rose in December
Pedestrians carry shopping bags as they shop in San Francisco on Dec. 22, 2011. Photographer: David Paul Morris/Bloomberg

Jan. 8 (Bloomberg) -- Sales at U.S. retailers probably rose in December as Americans bought discounted holiday items, a sign the economy picked up heading into 2012, economists said before a report this week.

The projected 0.3 percent gain in purchases would follow a 0.2 percent advance in November, according to the median forecast of 56 economists surveyed by Bloomberg News ahead of Commerce Department figures on Jan. 12. Other data may show consumer confidence rose this month.

Retailers like Macy’s Inc. spurred demand by cutting prices and extending hours to ensure consumers, strapped by falling home prices and stagnant wages, shopped for holiday gifts. A report last week showed unemployment fell to an almost three-year low and hiring accelerated, indicating an improving job market will give workers the means to sustain purchases.

“There is a little more momentum,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. “We’re ending the year in a more positive frame of mind.”

Employers added 200,000 jobs in December, twice as many as the prior month, and the unemployment rate dropped to 8.5 percent, Labor Department data showed Jan. 6. At the same time, hours worked and earnings picked up.

An improving labor market helped make for a brighter holiday shopping season. Retail sales at stores open more than a year may have gained as much as 4.5 percent in December, more than previously estimated, as shoppers pursued discounts, the International Council of Shopping Centers said in a statement last week.

Online Sales

Americans also turned to the Internet for their shopping needs. Online retail purchases rose to a record $37.2 billion in November and December, a 15 percent increase from 2010, Reston, Virginia-based, ComScore Inc. said in a statement Jan. 4.

Favorable weather across the U.S. may have fueled December sales of building materials, restaurant meals and general merchandise, economists at Credit Suisse said in a research note to clients. The average temperature in the contiguous 48 states was 35 degrees Fahrenheit (1.7 degrees Celsius), the 34th warmest December in 117 years, according to the National Climatic Data Center’s website.

Signs the economy was gathering momentum at the end of 2011 has propelled share prices. The Standard & Poor’s 500 Index has climbed 10 percent since a recent low on Nov. 25.

Auto Sales

Meantime, auto purchases have improved. Car and light truck sales in the U.S. advanced in December at a 13.5 million annual rate after November’s 13.6 million, the best two months since May-June 2008, according to researcher Autodata Corp. Sales averaged 16.4 million in the two years before the recession began in December 2007.

Ford Motor Co., the second-largest U.S. carmaker, posted a 10 percent gain in sales last month from a year earlier, and closed out 2011 with 2.15 million light vehicles purchased, an 11 percent gain.

“We were able to end the year on, what we feel, is a high note,” Erich Merkle, Ford’s U.S. sales analyst, said on a conference call Jan. 4. “December was a strong number.”

Faster job growth and a pickup in wages helped put Americans in a better mood. The Thomson Reuters/University of Michigan preliminary consumer confidence gauge for January probably rose to 71.5, the highest in seven months, from 69.9 at the end of December, economists surveyed by Bloomberg forecast the group’s data will show on Jan. 13.

Trade Deficit

Improved demand in the fourth quarter may have prompted companies to import more from overseas, leading to a bigger trade deficit. The gap widened in November to $45 billion from $43.5 billion a month earlier, according to the median estimate before the Commerce Department’s Jan. 13 figures. The October shortfall was the smallest since December 2010.

A gain in imports helped boost stockpiles in November. Business inventories climbed 0.4 percent during the month after a 0.8 percent October gain, according to the median estimate before the Commerce Department’s Jan. 12 data.

                   Bloomberg Survey

                        Release    Period    Prior     Median
Indicator                 Date               Value    Forecast
Retail Sales MOM%         1/12      Dec.      0.2%      0.3%
Retail ex-autos MOM%      1/12      Dec.      0.2%      0.3%
Business Inv. MOM%        1/12      Nov.      0.8%      0.4%
Trade Balance $ Blns      1/13      Nov.     -43.5     -45.0
Import Prices MOM%        1/13      Dec.      0.7%     -0.1%
Import Prices YOY%        1/13      Dec.      9.9%      8.3%
U of Mich Conf. Index     1/13     Jan. P     69.9      71.5

To contact the reporter on this story: Bob Willis in Washington at

To contact the editor responsible for this story: Christopher Wellisz at

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