Tags: Retail | Sales | Food | Gas | us | economy | spending

Costly Food, Gasoline Hold Down Retail Sales

Thursday, 12 May 2011 08:38 AM

 

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Sales at U.S. retailers rose in April, reflecting gains at service stations and grocery stores as fuel and food prices climbed.

The 0.5 percent increase was the smallest since July and followed a 0.9 percent March gain that was more than double the previous estimate, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 0.6 percent rise. Sales excluding automobiles and gasoline increased 0.2 percent.

Mounting bills for gasoline and groceries are leaving Americans with less money for other purchases. At the same time, chains like Limited Brands Inc. and Macy’s Inc. (M) topped analysts’ sales estimates last month, a sign the improving job market will prevent consumer spending, which accounts for about 70 percent of the economy, from faltering.

“Consumer resilience has begun to fray a little because of higher gas prices,” said Yelena Shulyatyeva, an economist at BNP Paribas in New York, who correctly forecast the gain in retail sales. “Consumers are spending little by little. We expect the labor market to continue its recovery.”

Other reports showed the number of workers filing claims for unemployment insurance payments dropped less than forecast last week and wholesale prices climbed more than projected in April.

Jobless Claims

Applications for jobless benefits decreased 44,000 in the week ended May 7 to 434,000, Labor Department figures showed. Economists forecast 430,000 claims, according to the median estimate in a Bloomberg survey.

The producer-price index rose 0.8 percent compared with a 0.6 percent median estimate of economists surveyed, other figures from the Labor Department also showed. The so-called core measure, which excludes volatile food and energy costs, increased 0.3 percent, more than projected.

Stock-index futures held earlier losses after the reports. The contract on the Standard & Poor’s 500 Index maturing in June fell 0.5 percent to 1,332.2 at 8:52 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 3.17 percent from 3.16 percent late yesterday.

Retail sales were projected to rise after a 0.4 percent gain previously reported for March, according to the Bloomberg survey. Estimates of the 78 economists surveyed ranged from gains of 0.2 percent to 1.2 percent.

Sales Breakdown

Eight of 13 major categories showed gains last month, led by a 2.7 percent jump at service stations and a 1.2 percent advance at food and beverage stores.

The retail sales figures, which aren’t adjusted for inflation, got a boost from receipts at service stations that reflected higher gasoline costs. Regular fuel averaged $3.81 a gallon in April, up from $3.54 in March.

The price reached $3.99 on May 4, the highest since July 2008, according to AAA, the nation’s biggest motoring organization.

Sales rose 0.2 percent at automobile dealers, today’s report showed. That’s consistent with industry data. Industrywide light- vehicle sales ran at a seasonally adjusted annual rate of 13.2 million in April, topping the 13 million pace for the third straight month, according to researcher Autodata Corp. Detroit- based General Motors Co. (GM)’s U.S. deliveries jumped 26 percent, while Dearborn, Michigan-based Ford Motor Co. (F) had a 13 percent gain.

‘Steady Recovery’

“We continue to believe that the economy will stay on the current steady recovery course,” Don Johnson, GM’s vice president of U.S. sales operations, said on a May 3 conference call.

Purchases excluding autos rose 0.6 percent, today’s report showed, matching the survey median.

Excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, sales rose 0.2 percent, the smallest gain so far this year, after a 0.6 percent increase the prior month.

Payrolls grew by 244,000 last month, the seventh straight gain, after increasing a revised 221,000 the prior month, Labor Department figures showed. Nonetheless, the jobless rate climbed to 9 percent, the first increase since November, according to a separate survey of households.

More hiring helps explain the better-than-forecast retailer results for April. Sales at stores open at least a year rose 8.7 percent from the same month last year, the 20th straight gain, a report from Retail Metrics Inc. showed last week.

Beating Forecasts

Limited, the Columbus, Ohio-based operator of Victoria’s Secret, reported a 20 percent jump in same-store sales, almost double the average estimate of analysts compiled by Retail Metrics, which tracks more than two dozen U.S. chains.

Sales climbed 10.8 percent at Macy’s, the second-largest U.S. department store chain, also exceeding projections. The Cincinnati-based company yesterday raised its annual profit forecast after first-quarter earnings grew more than five-fold from a year ago.

“We are off to another strong start this year and we have every expectation it will continue,” Karen Hoguet, chief financial officer of Macy’s, said on a conference call with investors yesterday.

© Copyright 2014 Bloomberg News. All rights reserved.

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