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Retail Sales in U.S. Probably Climbed on Pickup in Car Purchases

June 13 (Bloomberg) -- Retail sales in the U.S. probably increased in May by the most in three months as Americans took advantage of cheap borrowing costs to purchase new cars, economists said before a report today.

The 0.4 percent gain would follow a 0.1 percent advance in April, according to the median forecast of 83 economists surveyed by Bloomberg. Other reports may show little change in first-time jobless claims last week or in the cost of imported goods in May.

Borrowing costs held down by the Federal Reserve’s record monetary stimulus are bolstering car sales in the face of higher taxes and limited income growth. Higher stock and home prices are shoring up confidence, driving orders at retailers such as Gap Inc. and underpinning the household purchases that account for about 70 percent of the economy.

“We’re seeing a lot of strength in auto sales coming from the retail sector and that’s been very much helped by the low interest-rate environment,” said Sarah Watt, an economist for Wells Fargo Securities LLC in Charlotte, North Carolina. The increase in the payroll tax this year “hasn’t really phased consumers too much. But we’re still not really seeing a substantial breakout.”

The Commerce Department will release the retail sales figures at 8:30 a.m. in Washington. Economists’ estimates in the Bloomberg survey ranged from a decline of 0.1 percent to a gain of 0.8 percent.

Bigger job gains that lead to increased wage growth would help spur consumer purchases. Employers added 175,000 jobs last month, the Labor Department said last week. Job gains averaged 176,250 in the year ended last month.

Jobless Claims

Figures at 8:30 a.m. today from the Labor Department are projected to show jobless claims held at 346,000 in the week ended June 8, according to the Bloomberg survey median. The agency may also report at the same time that import prices were little changed in May, showing limited inflation.

Household spending will grow at a 1.9 percent annualized rate this quarter after expanding at a 3.4 percent pace in the first three months of the year, the most since the end of 2010, according to the median forecast of economists surveyed by Bloomberg this month.

Today’s retail sales figures may show an increase in purchases at auto dealers. Cars and light trucks sold at a 15.2 million annualized rate in May, making it the sixth month out of the last seven to exceed the 15-million mark -- a level that previously hadn’t been reached since February 2008.

A pickup in demand is convincing executives at Toyota Motor Corp. that the Japanese automaker will meet a sales goal for its Prius model in the U.S. after saying in April that the world’s biggest carmaker may adjust the target as declining gas prices restrained demand.

Economy ‘Improving’

“We’re on target for sales of 250,000 units of the Prius family,” Jim Lentz, Toyota’s North American chief executive officer, said yesterday in Nagoya City, Japan. “The U.S. economy finally seems to be improving.”

Sales excluding autos, gasoline and building materials, the figures used to calculate gross domestic product, probably climbed 0.3 percent after falling 0.1 percent the prior month, according to the median forecast in the Bloomberg survey.

Same-store sales showed signs of strength last month, rising for nine of the 10 companies tracked by Swampscott, Massachusetts-based Retail Metrics. L Brands Inc.’s sales climbed 3 percent, beating the 2.9 percent estimate. Purchases at the company’s Victoria’s Secret brand were up 4 percent, while the Bath & Body Works brand gained 3 percent.

Gap Sales

San Francisco-based Gap, the largest U.S. specialty apparel retailer, last week reported a 7 percent increase in May sales compared with the same month in 2012, almost double the 3.7 percent gain projected by analysts on average.

The American consumer “is incredibly resilient,” Eric Wiseman, chief executive officer of VF Corp., the world’s largest apparel maker, said in a June 12 interview. “Are there risks that the economy could slow down? Yes. But for now, the consumer seems pretty engaged.”

Rising stock prices and rebounding housing markets are helping to bolster household balance sheets and keep Americans spending amid higher taxes. The Standard & Poor’s 500 Index has advanced 13.1 percent this year.

Property values rose 10.5 percent in the 12 months through March, the biggest gain in seven years and the 13th consecutive advance in national home prices, according to Irvine, California-based CoreLogic Inc.

                        Bloomberg Survey

================================================================
                            Retail   Retail   Retail  Initial
                             Sales ex-autos  control   Claims
                              MOM%     MOM%     MOM%   ,000’s
================================================================

Date of Release              06/13    06/13    06/13    06/13
Observation Period             May      May      May    8-Jun
----------------------------------------------------------------
Median                        0.4%     0.3%     0.3%      346
Average                       0.4%     0.3%     0.3%      347
High Forecast                 0.8%     0.7%     0.6%      360
Low Forecast                 -0.1%    -0.2%     0.1%      335
Number of Participants          83       72       22       51
Previous                      0.1%    -0.2%    -0.1%      346
----------------------------------------------------------------
4CAST Ltd.                    0.3%     0.3%     ---       350
ABN Amro Inc.                 0.5%     ---      ---       340
Action Economics              0.4%     0.3%     ---       341
Ameriprise Financial Inc      0.5%     0.5%     ---       345
Banca Aletti & C spa          0.3%     ---      ---      ---
Bank of the West              0.2%     0.0%     ---      ---
Bank of Tokyo- Mitsubishi     0.5%     0.3%     ---       340
Banorte-IXE                   0.5%     ---      0.1%     ---
Bantleon Bank AG              0.5%     0.4%     ---      ---
Barclays                      0.4%     0.2%     0.1%      345
Bayerische Landesbank         0.4%     0.2%     ---      ---
BBVA                          0.6%     0.4%     ---       335
BMO Capital Markets           0.2%     0.2%     ---       345
BNP Paribas                   0.5%     0.2%     0.1%      350
BofA Merrill Lynch Resear     0.5%     0.3%     0.2%      340
Briefing.com                  ---      ---      ---       350
Capital Economics             0.4%     0.3%     ---      ---
CIBC World Markets            ---      0.5%     ---      ---
Citi                          0.4%     0.3%     0.4%      355
ClearView Economics           0.4%     0.3%     ---      ---
Commerzbank AG                0.5%     0.3%     ---       340
Credit Agricole CIB           0.6%     0.4%     ---      ---
Credit Suisse                 0.4%     0.5%     0.6%      350
Daiwa Securities America      0.0%     0.0%     ---      ---
Danske Bank A/S               0.2%     0.1%     ---      ---
DekaBank                      0.5%     0.3%     0.1%     ---
Desjardins Group              0.5%     0.4%     ---       342
Deutsche Bank Securities      0.3%     0.3%     ---       345
Deutsche Postbank AG          0.3%     0.2%     ---      ---
DZ Bank                       0.5%     0.4%     ---      ---
First Trust Advisors          0.7%     0.4%     ---       345
FTN Financial                 0.4%     0.3%     ---      ---
Goldman, Sachs & Co.          0.5%     0.3%     0.3%     ---
Hammer Partners SA            0.4%     0.3%     ---      ---
Helaba                        0.4%     0.3%     ---       350
High Frequency Economics      0.5%     0.5%     0.4%      350
HSBC Markets                  0.1%     0.4%     0.4%      353
Hugh Johnson Advisors         0.5%     0.4%     ---       340
IDEAglobal                    0.5%     0.3%     ---       340
IHS Global Insight            0.4%     0.2%     ---       345
Informa Global Markets        0.4%     0.4%     ---       350
ING Financial Markets         0.7%     0.4%     ---       340
Intesa Sanpaolo               0.5%     0.3%     ---      ---
J.P. Morgan Chase             0.5%     0.3%     0.3%      350
Janney Montgomery Scott L     0.3%     0.2%     ---      ---
Jefferies LLC                 0.5%     0.4%     ---       355
John Hancock Financial        0.4%     ---      ---       338
Landesbank Berlin             0.3%     0.3%     ---      ---
Landesbank BW                 0.6%     ---      ---      ---
Lloyds Tsb Bank Plc           0.4%     0.3%     ---       340
Maria Fiorini Ramirez Inc     0.4%     0.3%     ---       346
MET Capital Advisors          0.3%     ---      ---      ---
Mizuho Securities             0.2%     0.2%     ---       350
Modal Asset                   0.4%     ---      0.4%     ---
Moody’s Analytics             0.3%     0.2%     ---       355
Morgan Stanley                0.3%     0.4%     0.3%      355
National Bank Financial       0.5%     0.3%     ---      ---
Natixis                       0.4%     0.3%     ---      ---
Nomura Securities Intl In     0.7%     0.7%     0.5%     ---
Nord/LB                       0.4%     0.3%     ---       340
OSK Group/DMG                 0.4%     0.2%     ---      ---
Oxford Economics Ltd          0.6%     0.4%     0.4%      345
Pantheon Macroeconomics       0.5%     0.5%     ---       360
Pierpont Securities LLC       0.5%     0.4%     ---       352
PineBridge Investments        0.4%     ---      ---       350
PNC Bank                      0.5%     0.4%     ---      ---
Prestige Economics            0.3%     0.2%     ---      ---
Raiffeisenbank Internatio    -0.1%    -0.2%     ---      ---
Raymond James                 0.3%     0.3%     0.3%     ---
RBC Capital Markets           0.1%     0.2%     0.2%      345
RBS Securities Inc.           0.5%     0.2%     ---       360
Regions Financial Corp        0.5%     0.3%     ---      ---
Santander Asset Mgmt          0.2%     ---      0.3%     ---
Scotiabank                    0.4%     0.2%     ---       350
SMBC Nikko Securities         0.8%     0.7%     ---      ---
Societe Generale              0.6%     0.4%     0.1%      360
Southbay Research             ---      ---      ---       352
Southern Polytechnic Stat     ---      ---      ---       360
Standard Chartered Bank       0.3%     ---      ---       340
Stone & McCarthy Research     0.2%     0.1%     ---       350
TD Securities                 0.4%     0.3%     0.2%      340
UBS                           0.4%     0.3%     0.2%      350
UniCredit Research            0.2%     ---      ---      ---
University of Maryland        0.3%     0.3%     ---       346
Wells Fargo & Co.             0.3%     0.1%     ---      ---
Westpac Banking Co.           0.3%     ---      ---       345
Wrightson ICAP                0.5%     0.5%     0.6%      345
================================================================

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 at cwellisz@bloomberg.net

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