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Apr-15-2008Retail Sales Climbed 0.2% Last Month, But Flat Outside Of Higher ...(topic overview)
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Retail industry sales for March (which exclude automobiles, gas stations, and restaurants) dipped 0.9 percent unadjusted over last year and were down 0.3 percent from the prior month, according to the National Retail Federation. March retail sales released Monday by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 0.2 percent seasonally adjusted from the previous month and increased 0.1 percent unadjusted year-over-year. [1] According to the Commerce Department's report released on Monday, March retail sales increased slightly by 0.2 percent, following a decline of 0.4 percent in February.[2]
Several first-tier economic reports are scheduled to be released in the upcoming week, including the Commerce Department's retail sales report for March, the Labor Department's consumer and producer price inflation reports for March, the March housing starts report of the Commerce Department, the Federal Reserve's industrial production report for March and the results of the April manufacturing surveys of the New York Federal Reserve and the Philadelphia Federal Reserve.[3] Given the list of headwinds facing U.S. consumers ' falling household net worth due to lower house and equity prices, the sharp curtailment of housing equity extraction, elevated food and energy prices, virtually existent household savings, and a marked deterioration in labor market conditions ' the outlook for consumer spending over coming months is somewhat bleak. Retail sales edged up in March, which is the only positive thing I am going to say about this report. There were strong increases in food and gasoline demand, which is likely just the result of the price spikes in these goods. People can cut back their eating and energy usage only so much and the cost increases appear to be outpacing any conservation efforts.[4] "If you're getting an inflationary increase in gasoline and food, that would mask the true weakness in consumer spending. This is consistent with recessionary conditions.'' Treasury securities, which had risen earlier in the day, lost their gains as the retail sales report beat economists' estimates. Yields on benchmark 10-year notes were at 3.51 percent at 4:18 p.m. in New York, compared with 3.47 percent at its close April 11.[5] Despite the modest monthly increase in retail sales, concerns about the outlook for consumer spending are likely to remain, particularly after last week's University of Michigan report showing a 26-year low in consumer sentiment. Monday, April 14, 2008 8:40:54 AM - The Swiss currency was strong against its American and Japanese counterparts in trading on Monday morning in New York. The currency saw little direction against its European counterparts.[6]
Despite the stronger-than-expected retail sales reading in March, consumer spending is only on pace to gain around 1% in the first quarter, which will be largely offset by a further decline in housing construction. These data in no way affect our judgment that the economy slipped into recession in December, which is largely based on labor market related data.[4] "Aside from gasoline station sales, retail sales were flat and very consistent with the view that consumer spending is slowing and the U.S. economy is on the edge of a recession -- if not in a recession," said Hugh.[7] WASHINGTON -- U.S. retail sales unexpectedly climbed in March, but the small increase was the work of gasoline station sales, driven by the higher oil prices that have otherwise subdued consumers and drained the economy.[7] WASHINGTON, April 14 (Reuters) - U.S. retail sales rose unexpectedly in March as consumers dug deep to cover record high gasoline costs, according to a government report on Monday that did little to dispel the gloom hanging over the economy.[8]
WASHINGTON (AFP) — U.S. retail sales rebounded 0.2 percent in March after declining sharply in the prior month as consumers appeared to step up spending despite swirling economic pressures, a government report showed Monday.[9] "U.S. retail sales were marginally above consensus forecasts in March (and February's figures were revised slightly higher), but the fact that the data beat the markets' low expectations should not distract from the bigger picture: consumer spending is already soft, and the slump in consumer confidence suggests it will weaken further," said Julian Jessop, chief international economist from Capital Economics.[10] Economists track retail sales closely because consumer spending accounts for around two-thirds of all U.S. economic growth.[9]
Companies' stocks of unsold goods rose 0.6 percent in February as sales dropped, a separate report showed. Consumer spending, which accounts for more than two-thirds of the economy, is waning as households struggle with an 11 percent jump in gas prices this year to $3.37 a gallon, a rising jobless rate and a slump in home values. Investors anticipate that the Federal Reserve will cut its benchmark interest rate at least a quarter point this month to alleviate the economic downturn.[5] Excluding gasoline, sales were flat last month, suggesting the consumer spending that fuels two-thirds of the economy's thrust is flagging. "It is a report that seems to highlight that consumers are moving into a more cautious mode," said Drew Matus, senior financial economist at Lehman Brothers in New York.[8] "Gas essentially is accounting for the whole increase," Jonathan Basile, an economist at Credit Suisse Holdings Inc. in New York, told Bloomberg before the report. "Consumers haven't been this cautious in a very long time and that is likely to translate into a soft profile for consumer spending."[2]
Impact: Like last week's chain-store sales report, it depends on the timing. This release can rattle markets at times like these, when investors are sensitive to any indication of increased or decreased spending. The headline numbers: Economists look at the total change in retail sales from one month to the next, but they also consider "core" sales, which exclude sales at car dealers and gas stations. This data is very volatile, so it can be more useful to look at three-month averages for a true trend.[11] Without a 1.1 percent jump in sales at gasoline service stations, retail sales would have been flat last month. Economists said the March report did nothing to dispel their worries that the country has either toppled into a recession or is very close to a downturn as households have been battered by a series of blows and now are facing rising layoffs.[12] Gasoline sales were 18.9 percent higher than in March 2007 and non-store retail sales rose 8.7 percent for the year, the report said.[13] The report showed that retail sales rose 0.2 percent in March following a revised 0.4 percent decrease in the previous month.[6] According to the Commerce Department, retail sales rose only 0.2 percent last month after a 0.4 percent falloff in February.[14] Retail sales rose 0.2 percent, the Commerce Department said today in Washington.[5]
Retail sales increased 0.2 percent last month after a 0.4 percent fall in February, the Commerce Department said.[8] March sales for all retail and food service providers increased a seasonally adjusted 0.2 percent from February following a steep decline last month of 0.4 percent, revised upward from an initial 0.6 percent drop, according to the U.S. Department of Commerce on Monday.[15]
Consumers spent more on gasoline by 1.1 percent in March, pushing up the retail sales, followed by the sales of food and beverages up by 0.4 percent. While, the nonstore retailers saw an increase in their sales by 2.1 percent and online retail sales increased 2.1 percent during last month.[2] The overall gain last month was stoked by gasoline station sales, which rose 1.1 percent, and internet retailing, as online retail sales increased 2.1 percent. Americans meanwhile appeared to regain some of their appetite for eating out as restaurant and cafe sales rebounded to show a gain of 0.3 percent compared with a sales decline of 0.2 percent in February.[9] On Wall Street, stocks finished a quiet session with the Dow Jones industrial average rising by 23.36 points to close at 12,302.06. The 0.2 percent increase in retail sales was slightly better than the 0.1 percent increase that analysts had expected but outside of the big jump in gasoline prices, sales in other areas either declined or posted lackluster gains such as the 0.2 percent rise in auto sales.[12] Gains were due to a rise in gasoline prices and retail sales less autos was a tenth lower than estimates at a gain of 0.1 percent.[16]
The March gain reflected the big jump in sales at gasoline service stations. Sales in most areas either declined or posted lackluster increases such as a tiny 0.2 percent rise in auto sales. Sales at department stores and general merchandise stores such as Wal-Mart fell by 0.6 percent in March while sales at specialty clothing stores were down 0.5 percent. Demand at these stores had been hurt by the fact that Easter came extremely early this year at a time when much of the country was still blanketed by frigid weather that chilled people's inclination to go shopping for spring clothes.[17] Dissecting the data further, we see that gasoline station sales inclined 1.1% in March after dropping 0.5% the previous month but excluding gasoline, retail sales would have been flat. Sales were strong at sporting goods where they rose 1.4% this month. Internet sales also showed its biggest rise since April when it gained 2.1%. Sales at general merchandise stores dropped 0.6% alongside furniture stores and appliances and electronics falling 0.3% and 0.4% respectively, but they weren't strong enough to bring the whole reading down.[18] Excluding sales of gasoline stations, which were helped by high energy prices, retail sales were flat in March.[19]
Retail sales at gas stations in March increased 1.1 percent versus February, and increased 18.9 percent versus March of last year. Excluding gas there was widespread weakness in March, including the apparel sector, but the results were not a surprise, he said.[15] The National Retail Federation reported retail sales figures, which exclude auto sales, gas and restaurants, dropped nearly 1 percent over March of last year and a fraction of a percent over February.[20]
Economists estimate that retail sales rose 0.1% in March, while retail sales growth excluding autos is expected to be 0.2%.[3] So-called core retail sales, excluding autos, gasoline and building materials, rose 0.2% in March after remaining flat in February.[21]
Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product, sales increased 0.2 percent after no change the prior month.[5]
Analyst estimate: Flat to slight growth. Actual: Sales rose 0.2 percent overall; excluding autos and gas, they rose 0.1 percent.[11] Excluding autos and gas, sales rose 0.1 percent, the Commerce Department reported.[11]
With auto, gas and restaurant sales, the numbers remained flat, with a growth of only a fraction of a percent over last year and the previous month, according to the U.S. Commerce Department.[20] U.S. retail sales rebounded in March according to a report from the Commerce Department, which saw a 0.2% month-over-month rise following the previous month's 0.4% revised decline.[10] Monday, April 14, 2008 8:51:25 AM - Monday morning, the Department of Commerce released its report on retail sales in the month of March, showing that sales increased by a little more than economists had been expecting after falling in the previous month.[6]
WASHINGTON, April 14 (UPI) -- The U.S. Commerce Department said Monday estimates of U.S. retail and food service sales for March gained slightly from the previous month.[13] The U.S. Commerce Department released its advance retail sales for the month of March coming in at 0.2% higher than the projected reading of 0.1% and higher than the prior revised reading of -0.4% from -0.6%.[18]
Core retail sales, which exclude auto sales, rebounded by 0.1 percent, the Commerce Department said in a monthly snapshot.[9] The Commerce Department reported Monday that total retail sales rose 0.2%, compared to a revised 0.4% decrease in February.[22] Retail sales increased 0.2%, after dropping 0.4% during February, the Commerce Department said Monday.[7] Retail sales increased by 0.2%, the Commerce Department reported this morning, above estimates for a 0.1% decrease.[4]
Numbers just out from the U.S. Commerce Department show retail sales edged up two tenths of a percentage point.[23]
April 14, 2008 -- After declining sharply in the prior month as consumers appeared to step up spending despite swirling economic pressures, U.S. retail sales rebounded 0.2% in March, a government report showed April 14.[24] Retail sales rose very moderately in March after a steep decline in February, evidence the prolonged credit crunch and higher energy and food prices are still pinching consumers.[14] Retail sales inched downward in March as consumers continued to battle high gas, energy and food prices.[20] Retail sales for March may see a weak trend, given the food and energy price inflation, which exerts a downward impact on consumers' purchasing power. Tightening lending standards and falling home prices have made it difficult for homeowners to tap their equity.[3]
Washington, D.C. (AHN) - The U.S. retail sales for the month of March was reported to be better-than-expected as it increased amid rising gasoline and food prices.[2] The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $381.4 billion, an increase of 0.2% from the previous month and 2.0% above March 2007.[19]
While the retail sales less autos also for the month of March came in at 0.1% lower than the prior reading of 0.2% and better than the previous reading of -0.2%. Yeah the increase wasn't that much more than expected, but this slight improvement somewhat changed market sentiment. The dollar started to gain after falling earlier in the session as Wachovia Corp, the fourth largest U.S.-bank, reported that it would have to cut its dividends and store $2 billion in capital funds as it was affected heavily by the sub-prime mortgage losses. They rushed to raise about $7 billion from shares to add more capital.[18] NEW YORK (CNNMoney.com) -- Retail sales were slightly better than expected in March, although high gas prices and a slowing economy continued to erode demand for products.[22] March retail sales rose 0.2% off the gain in gas prices as gas station sales rose 1.1%.[25] Low remarked the better-than-expected March result reflected a gas price increase that lifted gasoline sales by 1.1%. He said food sales rose 0.4%, also reflecting price increases.[26]
March retail sales rise 0.2% Boston Globe WASHINGTON - Americans spent less on furniture, clothing, and appliances in March as the economy faltered and more of their money went to pay for gasoline and food.[27] Most of the gains in March reflected higher gasoline prices; were it not for a 1.1. percent rise in gasoline sales, retail sales would have been flat last month.[14]
The 0.2 percent headline increase was a notch better than most analysts' consensus forecasts which called for a 0.1 percent rise. The government revised its February retail sales readings to a decline of 0.4 percent for the overall index and to a fall of 0.1 percent for core sales, compared with initial estimates showing a decline of 0.6 percent and 0.2 percent respectively.[9] The 0.2 percent increase in retail sales was slightly better than the 0.1 percent increase that analysts had expected and the February decline was revised from an even-bigger 0.6 percent plunge that had been initially reported.[17]
Excluding the modest increase in sales by motor vehicle and parts dealers, retail sales edged up 0.1 percent in March following a revised 0.1 percent decrease in February.[6]
On an annual basis, retail sales were up 2.0 percent in March, marking a notable slowdown compared to the 2.9 percent year-over-year growth seen in February.[6] In the past year, retail sales excluding motor vehicles are up 3.3 percent compared with up 4.5 percent in February.[16] Retail sales excluding auto and gas showed no change compared to the previous month's 0.1% decline.[10] Excluding auto sales, retail sales declined at a 0.2% rate in February after 0.5% growth in January.[3]
Economists had anticipated a 0.2% gain in the measure. Excluding both auto and gasoline sales, core retail sales showed an anemic 0.1% gain.[22] Excluding a big 1.1 percent rise in sales at gasoline service stations, retail sales would have been flat last month.[17] In addition to the 1.1 percent increase in sales at gasoline service stations, sales were up 0.3 percent at grocery stores, a gain that probably reflected continued big rises in food costs.[17] Stripping out volatile auto sales, sales rose 0.1% compared to a 0.2% gain in February, but the increase was boosted by a 1.1% jump in gasoline station purchases.[22] The overall rise in sales last month was supported by gasoline station sales, which rose 1.1%, and Internet retailing, as online retail turnover increased 2.1%.[24]
"The gain was very soft and it was more of an inflationary rise than anything else," said Ken Perkins, president of Retail Metrics. Overall, retail sales rose just 2% vs. a year earlier, their weakest showing since October 2002. That's not adjusted for inflation, which continues to rise.[28] Retail sales rose 0.2% in March after an upwardly revised 0.4% decline in February.[28]
Low stated that there was widespread weakness elsewhere, with declines in sales of building materials, electronics, clothing, general merchandise and furniture. There were increases in sales of sporting goods and non store retail (catalogs and internet sales), he remarked, the last likely reflecting the same bargain hunting that boosted discounters results. The analyst wrote, "Translating from retail sales to consumption is difficult this quarter because food and energy inflation are so prevalent and because there was so much movement toward discounters. The former will hurt real sales, but the latter will help. On net, real consumption is likely to be a fraction stronger after this report, raising the odds of a small increase in first quarter GDP."[26] Behind the headlines: The report gives us a wealth of data on specific categories -- department stores, plus stores that sell drugs and personal care items, furniture, sporting goods, electronics and appliances stores, building materials and clothing and so on. FYI: While this is a good measure of consumer demand for stuff, it doesn't reflect demand for services, which is by far the largest part of the economy. It also doesn't account for inflation -- sales are going up, but it's not clear how much is increased demand and how much is increased prices.[11]
Retail sales represent about half of consumer spending, which in turn accounts for about two-thirds of final sales in the economy.[21] WASHINGTON (MarketWatch) -- U.S. retail sales struggled but managed to show some improvement in March, keeping alive the question of whether or not the U.S. economy has sunk into recession.[21] The pair moved as U.S. retail sales data for March came in up 0.2% on Monday, compared to a flat expectation.[6]
The latest retail sales survey showed an improved picture compared with February, but analysts say consumers are still being pressured by the housing slump, a related credit squeeze and rocketing gasoline prices.[9] The equity market is unlikely to be swayed by the near expected growth in retail sales rather than dismayed by the energy price source.[25] The slightly better than expected retail sales growth reflected strong sales growth at sporting goods, hobby, book & music stores, non-store retailers, and gas stations.[6]
Retail Sales, which measures the dollar receipts at the stores that sells durable as well as non-durable goods, are expected to be released at 8:30 AM ET on Monday.[3]
Economists surveyed by Briefing.com expected a 0.1% gain in retail sales for the month.[22] The median retail sales estimate was based on a survey of 65 economists by Bloomberg News.[5]
"Spending is pretty sluggish," Kevin Logan, senior market economist at Dresdner Kleinwort in New York, who correctly forecast the sales figure less autos, told Bloomberg news report.[2]
Consumer spending will rise at an average annual pace of 0.5 percent in the first half of the year, according to a Bloomberg survey of economists taken in the first week of April. That would be the smallest two-quarter gain since purchases dropped in the six months that ended March 1991.[5] Building materials fell 1.6% after falling 0.1% previously, and general merchandise fell 0.6% after rising 0.3% in February. "This minimal gain in consumer spending will do little to prevent overall GDP growth from recording another flat reading in Q1 and does not augur well for preventing a decline in Q2 in the face of falling housing activity," said Paul Ferley, assistant chief economist RBC Capital Markets. "To ensure that negative GDP growth does not extend into the second half of the year, we expect that the Fed will continue to lower Fed funds by 50 basis points at the end of this month followed by another 25 basis points in June."[10]
Commenting on the Commerce Department figures, Brian Bethune, chief U.S. Financial Economist for Global Insight said, "Consumer spending continues to come under downward pressure from higher gasoline prices, slower growth in employment and compensation, and downward pressure on household net worth from declining home and equity asset prices.[1] Consumers are battling a number of problems, from soaring energy prices which have pushed gasoline pump prices up to record levels well above $3 per gallon, to a prolonged housing slump that has seen home prices plummet in many parts of the country, leaving consumers feeling less well off. Many economists believe the country has fallen into a recession which they believe will be short and relatively mild, ending this summer when 130 million households start spending their rebate checks from an economic stimulus package that Congress passed in February. President Bush talked Monday with members of his Cabinet about the troubled U.S. economy and urged lawmakers to make his tax cuts permanent.[17] "In addition to pre-existing headwinds from housing, high energy prices, and excessive debt, consumers are now facing a rapidly weakening labor market and a consequent reduction in wage and salary income growth," said Josh Shapiro, chief U.S. economist at MFR Inc.[21]
Gas prices spiked in March, said Brian Bethune, U.S. economist at Global Insight, which distorts the picture painted by the overall increase in retail and food services.[15]
Motor vehicle and parts sales rose 0.2% in March, vexing some economists who pointed out that big auto makers reported hefty sales declines last month.[24] Excluding autos, sales rose 0.1 percent, as forecast, following a 0.1 percent decline in February.[5] Overall sales rose 0.2 percent, soundly beating the 0.1 percent decline that had been expected.[11]
NRF said health and personal care stores sales rose 2.8 percent unadjusted from last March but decreased 0.1 percent seasonally adjusted from last month.[1]
Sales at chain stores open at least a year fell 0.5 percent in March, the biggest decline in almost a year, the International Council of Shopping Centers said last week.[5] Sales at department stores and general merchandise stores fell by 0.6 percent in March while sales at specialty clothing stores were down 0.5 percent. Demand at these stores was hurt by an extremely early Easter, which came at a time when most of the country was blanketed by frigid weather that depressed demand for spring clothes.[12]
Department store sales were 0% in March. After the upbeat data from the U.S., stock index futures were able to recover some of its losses as the numbers were better than expected.[18]
Last week, the University of Michigan's consumer sentiment index for early April plunged to the lowest reading in 26 years, reflecting in part a third straight month of job losses in March and a rise in the unemployment rate to 5.1 percent. Many analysts believe the sustained rise in layoffs is the strongest sign yet that the economy has slipped into its first recession since 2001.[12] The committee members believed that a contraction in the first half of 2008 is likely. Some of the members expressed their view that a prolonged and severe downturn could not be ruled out, given the restriction in credit availability and ongoing weakness in the housing market. Taking cognizance of these views and the split vote that occurred at the March meeting, expectations for more interest rate reduction are strengthening. State Street Global Advisors expects at least another 25-75 basis point cuts this year, with more reductions likely in 2009, if the projected slowdown in the first half of the year is sharper than anticipated. Most economic reports released last week had a negative tone attached to them. The most dismal reading of the week was the University of Michigan's consumer sentiment index, which plummeted by 6.3 points to 63.2, marking its lowest level since March 1982. Both current economic conditions as well as expectations index fell sharply, while short-term inflation expectation also rose 0.5 percentage points to 4.8%.[3]
Consumer confidence plunged to the lowest reading in 26 years in early April, according to the University of Michigan's consumer sentiment index, underscoring the pressures that households are facing and raising the likelihood that retail sales will remain depressed in coming months.[17] "Consumers are moving away from the brands and moving more to generic bulk type purchases." Retail sales have bounced a bit over the last few months, which is partially attributable to calendar shifts such as the earlier Easter and the extra leap year day that fell in February.[15]
'Major chain store reports were generally quite weak, unit auto sales fell to a two and a half-year low, retail payrolls contracted again, and consumer confidence plunged," said Adrienne Warren from Scotia Capital.[10]
The lingering housing market downturn seemed to be still weighing on consumers as home furniture store sales declined 0.3 percent while gardening store sales dropped 0.1 percent.[9] Electronics stores saw sales drop by 0.4 percent and health and personal care fell by 0.1 percent.[2] Sales during February fell a revised 0.4 percent, better than the initial report of a 0.6% drop.[11]
Today's report showed sales at automobile dealerships and parts stores increased 0.2 percent after dropping 1.2 percent in February.[5] Building material, garden equipment and supplies stores sales decreased 1.6 percent seasonally adjusted from February and 9.6 percent unadjusted from last March.[1] Excluding gasoline as well, year on year sales are up 2.3 percent in March, also below February's reading of a gain of 3.2 percent.[16] In the year to March, overall sales were up two percent while sales excluding autos had gained 3.3 percent.[9]
The currencies traded as data showed UK output prices for home sales of manufactured products rose 6.2% from the previous year in March.[6] Gasoline station sales were up 18.9% from March 2007 and sales of nonstore retailers were up 8.7% from last year.[19] The gain reflected a jump in sales at gasoline stations on record prices at the pump, which hit $3.389 a gallon in the week ended Monday.[28] Among the leading the gains were a 0.2% rebound in motor vehicles and parts following the previous month's 1.2% pullback and a 1.1% rebound in gasoline station sales, after February's 0.5% pullback.[10]
Ex-auto sales were up 3.3 percent year-over-year compared to the 4.5 percent growth seen in the previous month.[6] Electronics and appliance stores reported a nearly half percent decrease in sales over the previous month and a 1 percent year-over-year decrease.[20]
Department stores declined even more steeply from last year, losing 4.1 percent of sales to end at $17 billion for the month.[15] Sporting goods stores sales rose 1.5 percent unadjusted year-over-year and 1.4 percent seasonally adjusted month-to-month.[1] Excluding automobiles, retail sales rose 0.1% after shedding a revised 0.1% in February.[10] WASHINGTON -- Retail sales at apparel and accessory stores dropped in March.[15] Retail sales for the month of March were released this morning and the results were a bit deceiving.[16]
Retail sales in real terms is negative and will be a draw on first quarter GDP. Inflation data will be a focus this week with the PPI and CPI both on tap.[16] The consistent weakness in inflation-adjusted retail sales over the past three months points to flat, or at best slightly positive total consumer expenditures for the first quarter.[4]
The rise in retail sales initially lent U.S. stocks some support, but stocks later fell as an unexpected quarterly loss at Wachovia Corp (WB.N: Quote, Profile, Research ) hurt bank shares.[8] Retail sales declined by 0.6% in February compared to 0.4% growth in January.[3]
Economists had expected sales to edge up 0.1 percent compared to the 0.6 percent decrease originally reported for February.[6] Economists expected a 0.1% decline in March sales, while the rise in sales ex-autos was in line with expectations.[21] Analysts questioned even the small rise in auto sales, saying the government statistics did not square with industry reports showing big declines in unit sales in March.[12]
The report also indicated that the sales in building materials slumped by 1.6 percent, which is considered as the largest decline since December 2007.[2]
"There's no question the trend in core sales is slowing sharply, led by housing-related sectors, and there is every reason to expect outright declines over the next few months as the plunge in consumers' confidence feeds through," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.[22] U.S. economic growth has slowed dramatically in recent months and a growing number of economists believe the world's largest economy will experience a recession during the first half of 2008.[9] Robert Brusca, chief economist at FAO Economics, said the economy is on a "razor's edge," close to recession but not technically in one. "It does not seem likely that the economy as a whole (GDP) will post a very large negative growth rate if it posts one at all. This will keep us guessing as to whether or not it's a recession.[21]
The odds the economy will be in a recession in the next 12 months jumped to 70 percent in April from 50 percent in March, according to a monthly survey of economists by Bloomberg. Employers cut 80,000 workers from payrolls in March, a third straight reduction and the most in five years, the government said this month.[5] Readings less than 50 indicate more pessimistic than optimistic responses. Just one quarter of the company chiefs anticipated an increase in hiring in their industry over the next six months, down from 42 percent at the same time last year. Fed officials, during their March 18 policy meeting, raised the possibility the economy would shrink in the first half of the year, according to minutes of the gathering issued last week.[5]
Capacity utilization is expected to stay week at 80.3 percent. The Philly Fed Survey and the Empire State Mfg. Survey are also on tap and both are expected to show negative numbers during March. Another report that will be closely watched is the Fed Beige Book report. This release is used by the FOMC to help them make decisions on interest rates.[16] Housing starts in March are expected to show another decline to 1.018 million annualized units from 1.065 million units in February. Building permits will be a focus as well as they tend to foreshadow housing starts data in the future. Inventory levels need to ease and this means problems for pricing and starts in the near term. Manufacturing data will also be heavy this week with several regional reports on tap, as well as the industrial production release.[16] Housing prices were up 0.2%, the same pace of increase in the previous month. Initial construction of residential units, which include both single and multi-family dwellings, for the month of March is expected to be 1,025,000 units. This data is slated to be released at 8.30 AM ET on Wednesday.[3] Food and beverage prices rose 0.4% in February compared to a 0.7% increase in the previous month.[3] Food and beverage sales also posted a 0.4% increase following the previous month's unchanged reading.[10] Results were driven down by an early Easter and an overall economic slowdown, despite an increase in sales for all retail and food service providers.[15]
"Consumer spending was not as weak as feared, but that is because people are paying a lot more for food and energy. There were strong increases in food and gasoline demand, which is likely just the result of the price spikes in these goods," said Joel Naroff, the president of Naroff Economic Advisors.[24] "If you're getting an inflationary increase in gasoline and food, that would mask the true weakness in consumer spending. This is consistent with recessionary conditions," Logan added.[2]
Consumers continue to reel under the weight of higher gas prices, weakening labor markets and declining housing and stock market wealth. As these fundamentals continue to deteriorate, any improvement in consumer spending will have to wait at least until rebate checks are mailed out next month.[4] Overall, that translates into weak real consumer spending in the first half of 2008 and a likely decline in overall real GDP growth."[1] The government launched an economic stimulus plan which includes income tax rebates aimed at boosting consumer spending.[22] Available indexes of consumer attitudes have moved to very low levels close to or below the lows in the prior two recessions raising the prospect of a sharp adjustment to consumer spending.[4]
The new report did nothing to dispel worries that consumers will cut back so sharply on spending that the country will tumble into a recession.[17] The new figures fueled concerns that consumers could still cut back on spending so much as to spark a deeper recession. (c) 2008 Newsroom.[14]
Many economists, including some in the Federal Reserve, already believe the U.S. is in a recession. Most expect it will be mild and short-lived, ending when 130 million households start spending their rebate checks this summer. [28] "Rising food and energy costs are driving down discretionary spending and reinforcing the view that the economy has stalled completely," said Joel Naroff, chief economist at Naroff Economic Advisers.[28] Some economists said the gain was partly explained by accelerating food prices, however, which have been stoked higher by rocketing global commodity costs.[24]
Higher gasoline prices, which averaged around $3.30 per gallon in March, and a continued surge in food prices could lead to higher consumer price inflation in March.[3] Consumer prices are also expected to rise, up 0.3 percent overall and 0.2 percent at the core.[16] Producer prices are expected to rise 0.5 percent in March with the core rate up 0.2 percent.[16]
The rise, however, reflected a surge in gasoline prices that pushed gas station receipts up a sharp 1.1 percent.[8]
Food and gas sales climbed 0.4% and 1.1%, respectively, last month due to higher prices.[28] One of the few categories that saw strength last month was food and beverage stores, where sales increased 0.4%.[4] Sporting goods sales increased 1.4 percent for the month and 1.5 percent for the year.[20]
In a year-over-year comparison, sales at apparel and accessory stores dropped 1.6 percent versus March 2007, to $18.6 billion.[15] Apparel and accessories specialty store sales dropped 0.5 percent in March from the prior month.[15]
General merchandise store sales dipped 0.6% in March. Costco ( cost ) and other wholesale chains last Thursday reported solid March sales, discounters such as Wal-Mart ( wmt ) did OK, and department stores such as J.C. Penney ( jcp ) had a terrible time.[28]
Clothing and accessories sales fell half a percent from February and 2 percent from March 2007.[20] Sales of furniture and home furnishings dropped nearly half a percent over February and more than 10 percent over March 2007.[20]
"With the earliest Easter in 95 years, the calendar shift will likely impact April sales as well. In order to get a true picture of retail performance, we will need to look at both March and April sales combined."[20] General Motors, Ford and Chrysler all reported a double-digit plunge in sales in March compared to the same month a year earlier.[24] Total sales for the January through March 2008 period were up 2.9% from the same period a year ago.[19]
Cars and light trucks sold at an average 15.2 million annual pace in the first three months of the year, the fewest since the third quarter of 1998. Auto sales will fall to 14.9 million this year, the lowest since 1995, Standard & Poor's forecast last week.[5] Sales were still trending lower as the first quarter ended, with the gain in sales in March unable to make up all the lost ground in February.[21] Sales of furniture, electronics and appliances, and building materials all dropped in March amid the biggest slump in the housing industry in a quarter century.[5]
The markets may also tune in to the February business inventories report of the Commerce Department, the Treasury International Capital report for February, the Conference Board's leading index for March, the housing market index of the National Association of Homebuilders and the regularly scheduled weekly oil inventory and jobless claims reports.[3] In a different report by the Commerce Department, the U.S business inventories grew 0.6% in February slightly worse than the 0.5% growth that analysts expected.[18]
In other economic news, the Commerce Department said that inventories held by businesses on shelves and backlots increased by 0.6 percent in February after an even bigger 0.9 percent gain in January.[17] In other economic news, U.S. business inventories rose 0.6% in February after a 0.9% gain in January, Commerce said. That likely will boost first-quarter GDP figures, but could act as a drag in coming months as businesses cut back on output to reduce stockpiles.[28]
The producer price index rose 0.3%in February following a 1% increase in January, according to a report released by the U.S. Labor Department.[3] Bond prices also fell in thin volume, while the dollar was little changed. The data follows a report last week showing U.S. consumer sentiment hit its lowest level in more than a quarter century in April as worries on jobs and inflation darkened shoppers' moods.[29] "Falling home prices, a stagnant job market, soaring gas prices and tighter credit conditions will keep U.S. consumers on the sidelines for some time."[10] "Don't expect to see consumers return any time soon," said Bernard Baumohl, managing director of the Economic Outlook Group. "They're going to be hibernating for the balance of the year, nursing the wounds that stem from the worst job market in five years, the highest drop in home prices in more than half a century, record high gasoline prices and the worst credit crisis since the Great Depression."[12]
Consumers are battling a number of problems, from soaring energy prices which have pushed gasoline pump prices up to record levels well above $3 per gallon, to a prolonged housing slump that has seen home prices plummet in many parts of the country, leaving consumers feeling less well off.[12] Excluding food and energy prices, producer prices rose 0.5% following 0.4% growth in January.[3] Senate Majority Leader Harry Reid said making Bush's tax cuts permanent would help multimillionaires and special interests, not average working Americans. Reid said stagnating incomes and rising health care, education, food and energy prices are squeezing middle-class families, who are looking for a change in U.S. economic policy — "not the same economic ideas that got us into this mess in the first place."[12] Producer prices may also derive strength from higher energy prices and a rebound in food prices.[3]
Rising energy prices continue to be a concern for economists with crud hitting new highs above $111 a barrel.[16] "Gas essentially is accounting for the whole increase," Jonathan Basile, an economist at Credit Suisse Holdings Inc. in New York, told Bloomberg before the report.[30] The increase came in slightly below economist estimates of a 0.2 percent increase.[6]
There were notable bright spots, though, namely in the discount sector, where Wal-Mart Inc., Costco and BJ's all reported same-store sales increases of 0.9, 7 and 6 percent, respectively.[15] Sales at electronics and appliance stores decreased 0.4 percent seasonally adjusted month-to-month and 1 percent unadjusted year-over-year.[1] Sales at furniture and home furnishing stores decreased 0.3 percent seasonally adjusted from last month and 10.2 percent unadjusted year-over-year.[1] Clothing and clothing accessories stores sales decreased 0.5 percent seasonally adjusted from last month and 2 percent unadjusted year-over-year.[1]
The lingering housing market downturn seemed to be still weighing on consumers as home furniture store sales declined 0.3% while gardening store sales dropped 0.1%.[24] Sales were also down at furniture stores, building supply stores and appliance stores, all areas where demand has been hurt by the bursting of the housing bubble.[17]
"There is an ongoing slowdown in real consumption," Bethune said. "The economy certainly looks like it's moving down, there's not a lot more to it than that." Apparel and accessories retailers posted dismal comparable store sales earlier this month, with the vast majority of retailers reporting decreases.[15] "Sales actually declined if you exclude gas stations, grocery stores and restaurants."[15] Elsewhere, general merchandise sales declined 0.6% while department store sales were unchanged for the month.[22] Furniture store sales fell for the eighth straight month to 0.3%, and sales at electronics and appliance chains slid 0.4%.[28] The pending home sales index fell 1.9% in February to 84.6 from an upwardly revised reading of 86.2 in January.[3] Among the weakest areas: Sales of building supplies fell 1.6%, clothing sales fell 0.5%, furniture purchases fell 0.3%, while sales of consumer electronics fell 0.4%.[22]
Markets moved on the news from retail sales but as we all know that the inventories don't do much.[18] We expect that retail sales will get a much needed shot in the arm from the fiscal stimulus plan which will put cash in the hands of financially stretched households beginning in May.[4]
"Unseasonably cooler weather created a challenging sales environment for many apparel retailers last month," said Rosalind Wells, chief economist for the National Retail Federation.[15] Many, including MarketWatch chief economist Irwin Kellner, noted that the gain in sales would be wiped away if inflation was taken into account.[21]
Just a handful of categories saw surprising gains last month, including a 0.2% rise in auto sales.[22] Sales less autos and gasoline were flat on the month following large losses in February.[16]
U.S. figures are showing shoppers spent slightly more in March than they did in February, when sales figures plummeted.[23] Retail trade sales were up 0.1% from February 2008 and were 1.8 % above last year.[19] On a year-over-year basis, inventories were up 4.8% in January compared to an 8.6% increase in business sales.[3] The ratio of business inventories to sales was 1.25 compared to 1.30 in the year-ago period.[3]
Sales via the Internet and mail order rose 2.1%, the biggest gain since last April. [21] Sales at building material and garden stores dropped 1.6%, the fourth straight monthly drop.[21] Giving some lift to the report, the drop in sales in February was not as bad as first feared.[21] Online merchants reported a 2.1% increase, while sellers of sporting goods, books and music saw a 1.4% rise in sales.[22] There was also a reported rise in vehicle sales, but that doesn't square with the decline in unit sales, so maybe category will be revised downward.[4]
Economists expect the index of Industrial Production to show a 0.1% decline for March, while capacity utilization is expected at 80.4%. [3] Economists predict that the headline index rose 0.3% and the core reading also increased 0.2% in March.[3]
Economists expect the wholesale price index to have climbed 0.4%, while the core reading is likely to reveal 0.2% growth.[3] The core reading, which excludes food and energy, also remained unchanged compared to the 0.3% growth expected by economists.[3]
Consumer prices remained unchanged in February compared to the 0.3% growth in the previous month.[3] The Philadelphia Fed's manufacturing index came in at -17.4 in March compared to the previous month's reading of -34.[3] The private research group's CEO index fell to 38, the lowest level in seven years, compared with 39 the previous three months.[5]
Consumer confidence fell to a record low in April, according to the IBD/TIPP Economic Optimism Index.[28]
The first look into the state of the manufacturing sector for the month could be gleaned from the New York Federal Reserve's Empire State Index, which is to be released at 8.30 AM ET on Tuesday.[3] Real Time Economics offers exclusive news, analysis and commentary on the economy, Federal Reserve policy and economics.[4] "You'll still see a sluggish if not contracting economy,'' Lakshman Achuthan, managing director of the Economic Cycle Research Institute in New York, said in a Bloomberg Television interview.[5]
Chief executive officers last quarter grew more pessimistic about the economy, according to a report today from the New York- based Conference Board.[5]
The nation's economy has been pushed to the brink of recession as American households are being pressured by record high gas prices and a severe downturn in the housing market.[22] The Fed meeting is set for April 29-30. There is a lot of economists that feel the economy is already in a recession with Fed Chairman Bernanke actually admitting last week that this could be the case.[16] The Bush administration, which has yet to call the current slowdown a recession, insists a $168 billion economic stimulus plan will help jump-start the economy when checks begin arriving for 130 million households next month. President Bush told members of his Cabinet on Monday that those stimulus checks will be "an important part of making sure this economy begins to recover in a way that will add confidence and hope." The day before the April 15 tax filing deadline, Bush also called on Congress to make his first term tax cuts permanent as another way to boost the economy by eliminating "economic uncertainty" in the tax code.[12]
April 14 (Bloomberg) -- Americans spent less on furniture, clothing and appliances in March as the economy faltered and more of their money went to pay for gasoline and food.[5] The March gain mainly shows the increasing costs for gasoline, which struck record highs. Excluding these costs, retail figures would have been flat last month.[23] The March gain primarily reflected higher costs for gasoline, which climbed to record highs.[17]
For the first quarter, the gain seen in March is going be hard to offset the losses in the previous months.[18] The gain in business inventories in February followed a revised 0.9 percent rise the previous month.[5] Building materials and supplies fell 1.6 percent from the previous month and nearly 10 percent year-over-year.[20]
Receipts at filling stations increased 1.1 percent in March following a 0.5 percent decline the prior month. [5] Sporting-goods stores and gasoline stations led growth, while building supply stores and department stores led the declines.[11] Consumers stayed away from the malls last month as their money went to pay for gasoline and food, the Commerce Department said Monday.[28] WASHINGTON (AP) — Consumers, beset by a credit crunch, rising energy and food costs and a prolonged housing slump, stayed away from the malls in March.[17]
The U.S. Federal Reserve's consumer credit report for February showed that consumer credit increased at less-than-expected annual rate of 2.5% or $5.1 billion. [3] 'But, taking our cues from indicators of consumer confidence, we believe that household spending is turning decisively down and will register growth of less than 1% in 1Q08,' he said.[10] The modest gain leaves low expectations for Q1 real personal spending growth at below 0.5%.[25]
Economists expect an increase for February, though the growth is projected to be more modest than the 0.8% increase seen in January. The Swiss currency was mixed against its European counterpart in trading on Monday.[6] The housing starts for the month of February declined 0.6% to 1.065 million units compared to the 995,000 unit-rate expected by economists.[3] Industrial output slipped 0.5% in February compared to the mere 0.1% decline expected by economists.[3]
Economists expect the total net long-term capital flows to be $52.5 billion for February compared to $62 billion in the previous month.[3]
Monday's report is "very much consistent with recession," according to Michael Niemira, chief economist with the International Council of Shopping Centers.[22]
Industrial production is expected to fall 0.1 percent following a 0.5 percent decline in February. [16] Not surprisingly, the largest declines were found in building materials, off 1.6 percent, and general merchandise, down 0.6 percent.[16]
The average cost of a gallon of regular gasoline last month jumped 6.9 percent compared with February, according to figures from AAA, the nation's largest automobile club.[5] The $381.4 billion total was a 0.2 percent increase from February, when the tally stood at $380.2 billion.[13]
Since inflation will continue into the foreseeable future in all currencies, and especially the buck, if you are bidding or estimating something for future production, you'd better figure on constant prices increases. It was just a few years ago that a quart of Quaker State was under a dollar, and now close to $5.[4] The core inflation reading may also see some strength. State Street Global Advisors expect the annual rate of consumer price inflation to climb to 2.5% and stay around this level for much of this year.[3]
Wholesale price inflation for the month March is expected to be released at 8:30 AM ET on Tuesday.[3] Output prices climbed more than February's 5.9% growth and 5.6% expected by analysts.[6]
The Index of Industrial Production, which measures the physical output of the nation's factories, mines and utilities, is expected to be released at 9:15 AM ET on Wednesday. Although industrial production accounts for less-than one-fifth of the economy, it accounts for most of its cyclical variation.[3]
Spearheaded by a drop in auto production, industrial production for March may show a decline.[3]
"I don't think we're very optimistic about it ending anytime soon,'' J.C. Penney Co. Chief Executive Officer Myron Ullman said last week at the World Retail Congress in Barcelona. He reiterated that J.C. Penney plans to open 36 stores this year, down from an original plan of 50. [5] Storing up food for a year, as the Mormons do, might not be a bad idea, considering how food prices have gone up over the last couple of months.[4] Wheat, gasoline, food, building products, and yes, even gold and silver also. Prices of gold and silver are sort of stuck in the area where they are, but they won't remain there for long, I'll guarantee you.[4]
SOURCES
1. Retail Sales Declined in March - 4/14/2008 2:45:00 PM - JCK-Jewelers Circular Keystone
2. U.S. March Retail Purchases Rise By 0.2pct Led By Gasoline Sales | April 15, 2008 | AHN
3. Stimulus Measures- Not Measuring Up To Expectations [] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
4. Economics Blog : Economists React: Cost Increases vs. Conservation
5. Bloomberg.com: Economy
6. RTTNews - Forex News top stories, Forex Trading, European Market Update, Currency Market Update, Forex trading.
7. Free Preview - WSJ.com
8. WRAPUP 2-Surprise US retail sales rise doesn't dispel gloom | Markets | Markets News | Reuters
9. AFP: US March retail sales rebound 0.2 percent
10. Canadian Economic Press - Welcome
11. Business 101: Retail sales - New Jersey Local & Small Business News ' Economics & Finance News Articles - NJ.com
12. The Associated Press: Retail Sales Up a Bit, Led by Gas Costs
13. Retail sales rose slightly in March - UPI.com
14. Retail Sales Post Only Small Gain in March
15. FN
16. Economic Watchdog, Apr. 14 - Optionetics Commentary
17. The Associated Press: Retail Sales Post Modest Gain in March
18. Better Confidence? - Forex News | IBT FX Center
19. US retail sales increased in March because gasoline station sales were up 18.9% from March 2007 due to price hikes
20. Retail sales slide in March as gas, food prices rise - Nashville Business Journal:
21. Retail sales rise stronger-than-forecast 0.2% in March - MarketWatch
22. Retail sales rose 0.2% in March - Apr. 14, 2008
23. Sky News: US retail sales up
24. IndustryWeek : U.S. March Retail Sales Rebound 0.2%
25. Briefing.com: Retail Sales Rise, but Flat Ex-Gas
26. RTTNews - Currency Trading, Currency Market Update, Trading Opportunities, US Market Update .
27. March retail sales rise 0.2% - The Boston Globe
28. Retail Sales Climbed 0.2% Last Month, But Flat Outside Of Higher Gas Prices
29. Surprise retail sales rise doesn't dispel gloom | Reuters
30. March Retail Sales Up By 0.2 Percent As Gasoline Sales Rise By 1.1 Percent | April 15, 2008 | AHN
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