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Retail Sales Probably Fell as Sandy Kept U.S. Consumers Home

Retail Sales Probably Fell as Sandy Kept U.S. Consumers Home
A woman looks at receipts while carrying an Aldo Group Inc. shopping bag and descending stairs at the Fair Oaks Mall in Fairfax, Virginia, on Monday, Nov. 12. 2012. Photographer: Andrew Harrer/Bloomberg

Nov. 14 (Bloomberg) -- Retail sales in the U.S. probably fell in October for the first time in four months as superstorm Sandy kept consumers in the Northeast away from auto dealers and shopping centers, economists said before a report today.

The projected 0.2 percent drop in purchases would follow a 1.1 percent gain in September, according to the median forecast of 83 economists surveyed by Bloomberg. Another report may show prices paid by producers grew more slowly in October.

Companies like General Motors Co. and Ford Motor Co. have said last month’s sales slump will probably prove temporary as brighter job prospects, rising home prices and sturdier finances boost household confidence heading into the year-end holiday shopping season. Sustained gains in consumer spending, which accounts for about 70 percent of the economy, would help counter a slowdown in business investment.

“The consumer remains engaged,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “As long as consumers are feeling better about their home price and the job market keeps improving, it’s going to drive confidence higher. That’s translating into gains in retail sales.”

The Commerce Department will release the figures at 8:30 a.m. in Washington. Economists’ estimates ranged from a decline of 1.2 percent to a gain of 0.6 percent.

October’s projected slowdown comes after September and August marked the best back-to-back retail sales showing since late 2010. Part of the jump in purchases during that period was the result of households snapping up Apple Inc.’s new iPhone 5. Support also came from car and light truck sales, which climbed in September to a 14.9 million pace, the fastest in more than four years, according to figures from Ward’s Automotive Group.

Auto Sales

Those gains probably weren’t repeated in October, when Sandy, history’s biggest Atlantic storm, prevented potential shoppers from getting to stores. Auto demand dropped to a 14.2 million pace in October after the tempest slammed into the East Coast during the auto industry’s busiest time of the month. Carmakers have said those sales should be made up by the end of the year.

The storm also didn’t affect all retailers the same way. Stockpiling before Sandy struck likely boosted sales at grocery, drug and home-improvement stores, just as it hurt demand at department stores and merchants in malls, according to economists at Morgan Stanley in New York.

Some stores reported a pickup in October demand even with the adverse weather. Same-store sales at Macy’s Inc., the second-biggest U.S. department-store chain, rose 4.1 percent, topping the 4 percent average estimate of analysts surveyed by Retail Metrics Inc. Kohl’s Corp.’s same-store sales climbed 3.3 percent, beating estimates for a 0.8 percent gain.

Retail Shares

The Consumer Discretionary Select Sector SPDR Fund, which includes companies like Tiffany & Co. and Best Buy Co., has climbed about 16.8 percent this year, as spending has advanced.

Economists project the retail sales category used to calculate gross domestic product, which excludes auto dealers, building-material stores and service stations, will show a 0.3 percent gain in October following a 0.9 percent increase the prior month.

As the holiday shopping seasons begins, Hasbro Inc.’s retail customers are “looking forward to a good year,” David Hargreaves, chief operating officer of the Pawtucket, Rhode Island-based toymaker, said during a call with analysts on Oct. 22. “Certainly consumer demand has held up pretty well. I think they’re sort of cautiously optimistic.”

Improving confidence could help keep sales on the rise. The Thomson Reuters/University of Michigan consumer sentiment gauge advanced to a five-year high in November. Rising house prices are also shoring up wealth: The S&P/Case-Shiller index of home values in 20 cities has risen from a year earlier for the past three months, the longest positive stretch in two years.

Also today, an 8:30 a.m. report from the Labor Department will show producer prices increased 0.2 percent in October after a 1.1 percent gain the prior month that was propelled by fuel prices, according to the survey median.

                          Bloomberg Survey
================================================================
                            Retail   Retail      PPI     Core
                             Sales ex-autos               PPI
                              MOM%     MOM%     MOM%     MOM%
================================================================
Date of Release              11/14    11/14    11/14    11/14
Observation Period            Oct.     Oct.     Oct.     Oct.
----------------------------------------------------------------
Median                       -0.2%     0.2%     0.2%     0.1%
Average                      -0.1%     0.2%     0.2%     0.1%
High Forecast                 0.6%     0.8%     0.6%     0.4%
Low Forecast                 -1.2%    -0.6%    -0.2%    -0.1%
Number of Participants          83       73       73       70
Previous                      1.1%     1.1%     1.1%     0.0%
----------------------------------------------------------------
4CAST                        -0.1%     0.3%     0.6%     0.0%
ABN Amro                     -0.2%     ---      0.2%     0.2%
Acciones y Valores            0.4%     ---      ---      ---
Action Economics              0.6%     0.8%     0.2%     0.2%
Aletti Gestielle             -0.3%     0.1%     ---      ---
Ameriprise Financial         -0.2%     0.2%     0.1%     0.1%
Banca Aletti                 -0.2%     0.0%     0.2%     0.2%
Bank of the West             -0.1%     0.2%     0.3%     0.2%
Bank of Tokyo-Mitsubishi     -0.4%     0.1%     0.0%     0.2%
Banorte-IXE                   0.0%     ---      ---      ---
Barclays                     -0.1%     0.2%     0.0%     0.1%
Bayerische Landesbank         0.0%     0.4%     0.1%     ---
BBVA                          0.1%     0.3%     0.3%     0.1%
BMO Capital Markets          -0.3%     0.1%     0.1%     0.1%
BNP Paribas                  -0.3%     0.2%     0.1%     0.2%
BofA Merrill Lynch           -0.1%     0.3%     0.2%     0.1%
Briefing.com                 -0.4%     0.1%    -0.2%     0.1%
Capital Economics            -0.2%     ---      0.2%     0.2%
CIBC World Markets           -0.4%     0.1%     0.2%     0.2%
Citi                         -0.2%     0.3%     0.2%     0.1%
ClearView Economics           0.3%     0.6%     0.0%     0.1%
Commerzbank AG               -0.5%     0.0%     0.0%     0.2%
Credit Agricole CIB          -0.3%     0.1%     0.3%     0.2%
Credit Suisse                -0.3%     0.1%     0.3%     0.0%
Danske Bank A/S               0.1%     0.5%     0.1%     0.2%
DekaBank                      0.1%     0.5%     ---      ---
Desjardins Group             -0.4%    -0.2%     0.0%     0.1%
Deutsche Bank Securities     -0.2%     0.3%     0.1%     0.2%
Deutsche Postbank AG         -0.4%    -0.2%    -0.2%     0.1%
Exane                        -0.4%     0.0%     ---      ---
First Trust Advisors         -0.4%     0.6%     0.1%     0.1%
FTN Financial                -0.2%     0.1%     0.2%     0.2%
Goldman, Sachs & Co.         -1.2%    -0.6%     0.3%     0.0%
Hammer Partners SA           -0.4%     0.4%     ---      ---
Helaba                       -0.3%     0.1%     0.2%     0.2%
High Frequency Economics     -0.3%    -0.1%     0.5%     0.1%
HSBC Markets                 -0.4%    -0.3%    -0.2%    -0.1%
Hugh Johnson Advisors         0.2%     0.4%    -0.1%     0.3%
IDEAglobal                   -0.3%     0.2%     0.3%     0.2%
IHS Global Insight            0.0%     0.4%     0.3%     0.1%
Informa Global Markets        0.5%     0.7%     0.3%     0.2%
ING Financial Markets        -0.3%     ---      0.0%    -0.1%
Insight Economics            -0.1%     0.2%     0.3%     0.2%
Intesa Sanpaulo              -0.2%     0.3%     0.2%     0.0%
J.P. Morgan Chase            -0.1%     0.2%     0.4%     0.1%
Janney Montgomery Scott      -0.3%     0.1%     0.2%     0.0%
Jefferies & Co.              -0.2%     0.3%     0.2%     0.2%
John Hancock Financial        0.6%     0.6%     0.5%     0.1%
Landesbank Berlin             0.0%     0.2%     0.6%     0.1%
Lloyds Bank                   0.2%     0.5%    -0.1%     0.1%
Maria Fiorini Ramirez        -0.2%     0.3%     0.2%     0.2%
Market Securities             ---      ---      0.1%     0.2%
MET Capital Advisors         -0.2%     ---      0.2%     ---
Modal Asset                  -0.6%     ---      ---      ---
Moody’s Analytics             0.3%     0.4%     0.0%     0.1%
Morgan Stanley & Co.         -0.3%     0.3%     0.2%    -0.1%
National Bank Financial      -0.2%     0.2%     0.2%     0.1%
Natixis                       0.0%     0.3%     0.1%     0.2%
Nomura Securities             0.1%     0.5%     0.6%     0.1%
Nord/LB                      -0.2%     0.2%     0.0%     0.1%
OSK Group/DMG                -0.4%    -0.1%     ---      ---
Oxford Economics              0.5%     0.5%    -0.1%     0.1%
Pierpont Securities          -0.3%     0.1%     0.1%    -0.1%
PNC Bank                     -0.4%    -0.2%     0.3%     0.1%
Prestige Economics            0.1%     0.2%     ---      ---
Raiffeisenbank International -0.6%    -0.4%    -0.1%    -0.1%
Raymond James                -0.2%     0.3%    -0.2%     0.1%
RBC Capital Markets          -0.3%     0.1%     0.2%     0.1%
RBS Securities               -0.1%     0.2%     0.0%    -0.1%
Regions Financial             0.3%     0.5%     0.3%     0.1%
Renaissance Macro Research   -0.3%     0.1%     ---      ---
Scotiabank                   -0.2%     0.0%     0.2%     0.1%
SMBC Nikko Securities        -0.4%     0.1%     0.3%     0.4%
Societe Generale              0.0%     0.6%     0.5%     0.0%
Southern Polytechnic State    0.0%     ---      ---      ---
Standard Chartered           -0.3%     ---      0.1%     0.2%
Stone & McCarthy             -0.4%    -0.1%     0.2%     0.1%
TD Securities                -0.1%     0.3%    -0.1%     0.2%
UBS                           0.0%     0.4%     0.2%     0.0%
Union Investment              0.3%     ---      0.2%     ---
University of Maryland        0.1%     0.5%     0.0%     0.2%
Wells Fargo & Co.            -0.2%     0.1%     0.0%     0.1%
Westpac Banking Co.           0.0%     0.3%    -0.1%     0.2%
Wrightson ICAP               -0.1%     0.2%     0.3%     0.2%
================================================================

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

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

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