This Week's Data: Retail Sales, Producer Prices, Confidence

Sunday, 08 Sep 2013 11:08 AM

 

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Retail sales probably rose at a faster pace in August as Americans bought more cars and trucks, a sign spending will help sustain economic growth in the second half of the year, economists said before a report this week.

Purchases climbed 0.4 percent after a 0.2 percent advance in July, according to the median forecast of economists surveyed by Bloomberg before Commerce Department figures on Friday. Other figures this week may show a pickup in August producer prices and little change in consumer optimism this month.

Industry data showing the strongest pace of vehicle sales since 2007 indicate job and wage gains, along with improvement in household wealth, are giving consumers the wherewithal to spend. The retail report is one of the last pieces of data before next week’s Federal Reserve meeting as policy makers consider whether to dial back record monetary stimulus.

“There’s some momentum here,” said Chris Christopher, a U.S. economist at IHS Global Insight in Lexington, Massachusetts. “Wage increases, even though they’re anemic, are outpacing price increases as long as those gas prices stay down. That gives consumers a little bit of spending power.”

Employment growth may need to pick up to provide a bigger boost to consumer spending, which accounts for about 70 percent of the economy. Payrolls grew by 169,000 last month, less than projected, and gains for the prior two months were revised down, figures from the Labor Department showed last week. Unemployment fell to 7.3 percent, the lowest since December 2008, as workers left the labor force.

“These are not the type of payroll numbers that will make people go out and spend like crazy,” Christopher said.

The data also showed average hourly earnings climbed 2.2 percent in the 12 months ended in August, the biggest gain since July 2011.

Fed Meeting

Fed officials, who meet Sept. 17-18, are debating when to begin scaling back $85 billion in monthly bond purchases, which they’ve pledged to continue until the job market shows substantial improvement. The central bank’s stimulus has helped drive a global equity rally, with the Standard & Poor’s 500 Index rising 16 percent this year.

Last week’s employment report was “worrisome” and may give the Fed incentive to delay tapering its pace of asset purchases, said Julia Coronado, chief economist for North America at BNP Paribas in New York.

“Growth has already been fairly disappointing this year and yet hiring had held up fairly well,” she said. “That tension seems to be being resolved with slower hiring.”

Cars and light trucks continue to be a bright spot in the economy, selling in August at the fastest annualized rate since November 2007, according to data from Ward’s Automotive Group. Sales at General Motors Co., Ford Motor Co., Toyota Motor Corp. and Honda Motor Co. all exceeded analysts’ estimates.

Minus Autos

The Commerce Department’s retail report may show sales excluding auto dealers climbed 0.3 percent in August after a 0.5 percent gain a month earlier. Industry reports showed some merchants struggled to attract customers. Retailers from Macy’s Inc. to Wal-Mart Stores Inc. missed second-quarter sales estimates.

Americans’ confidence was restrained in September as concern mounted about a U.S. military strike against Syria, which also pushed up prices at the gas pump. The Thomson Reuters/University of Michigan’s preliminary measure of sentiment for this month is forecast at 82 after a final reading of 82.1 in August, according the Bloomberg survey median before the Friday report.

The same day, the Labor Department may report prices paid to producers climbed 0.2 percent in August after no change a month earlier. The core measure, which excludes volatile food and energy costs, increased 0.1 percent for a second month, the Bloomberg survey showed.

© Copyright 2014 Bloomberg News. All rights reserved.

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