Posts Tagged ‘retail sales’

Let’s Go Shopping!

Tuesday, April 24th, 2012

Despite rising gas prices, retail sales in the U.S. rose 0.8 percent in March, proof that consumers are still filling up their tanks, according to economists.  The rise in purchases follows a 1.1 percent increased in February that was the biggest in five months, according to a survey of 71 economists.  The gain sent retail sales to a record high of $411.1 billion, 24 percent higher than the recession low hit in March 2009.  “Retail sales are going to end the quarter on a positive note,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc.  “Underlying job growth is decent.”

Sales may have been helped by the unusually warm weather. The average temperature was 51.1 degrees Fahrenheit, the warmest on record for the month in the past 117 years, according to the National Oceanic and Atmospheric Administration.  The economy expanded “at a modest to moderate pace” from mid-February through late March as manufacturing, hiring and retail sales strengthened, according to the Federal Reserve’s latest Beige Book report.  The central bank is maintaining its benchmark interest rate near zero until late 2014 to encourage economic expansion.

Americans spent more on building materials, cars, electronics, furniture and clothing in March.  A separate Department of Commerce report showed that American companies restocked at a steady pace in February, which suggests that businesses expect consumers to continue spending this spring.  The retail sales report is the government’s initial monthly look at consumer spending, which represents 70 percent of economic activity.  The increase, along with other positive data on inventories and trade, suggests growth in the January-March quarter could be stronger than first thought.  Economists are estimating growth at an annual rate of between 2.5 percent and three percent in the 1st quarter, which is in line with the annual pace reported for the October-December quarter.  Americans are feeling greater confidence in the economy after seeing hiring strengthen over the winter.  Job gains were typically 246,000 per month from December through February.

In terms of cars, “The industry and consumers have been very resilient in the face of higher pump prices,” Don Johnson, vice president of U.S. sales at General Motors, said.  “The steadily improving economy is playing a role and so is pent-up demand and an improved credit market.”

Corporate stockpiles rose a seasonally adjusted 0.6 percent, according to the Commerce Department. That’s less than January’s upwardly revised gain of 0.8 percent. The increase pushed stockpiles to $1.58 trillion which is nearly 20 percent more than the recent low hit in September 2009, just after the recession ended. Sales grew faster than inventories in February, rising 0.7 percent.  This is a good sign because it is evidence that companies aren’t building too much inventory, which can result in cutbacks in production in the future.

“The pace of inventory building is consistent with what you’d expect to see in a gradual expansion,” said Tim Quinlan, an economist at Wells Fargo.  Businesses are rebuilding their stockpiles after cutting them over the summer in fear of a double-dip recession.  Steady inventory growth in the 1st quarter, as well as a narrower trade deficit in February and stronger retail sales, has lifted the outlook for growth.

American households “have the income to propel their purchases now that we’re seeing job growth,” said Russell Price, senior economist at Ameriprise Financial Inc., the third- best forecaster of retail sales for the 24 months ended in March.  “They have adjusted to the higher price of fuel.  The economy now needs to build on its own momentum.”

Retail Sales Are on the Rise

Monday, April 2nd, 2012

February retail sales climbed the fastest in five months. Even rising gas prices didn’t dampen demand for cars, clothing and other goods.  According to the Commerce Department, retail sales rose a seasonally adjusted 1.1 percent to $407.8 billion in February; January retail sales were revised upwards to show a 0.6 percent rise instead of the initially reported 0.4 percent.  If you don’t count cars, sales climbed 0.9 percent.  Economists queried by MarketWatch had anticipated a 1.2 percent gain for the headline index and a 0.7 percent advance for retail sales, not counting autos.

Consumers are “unfazed by higher gas prices,” said Jonathan Basile, an economist at Credit Suisse, who accurately forecast the increase in spending.  “This is a pleasant surprise on the overall picture for the economy.  For the Federal Reserve, it’s steady as she goes.  They will be encouraged, but there is still a long way to go.”

Gourmet-cookware chain Williams-Sonoma Inc., said demand improved at the start of the year following the holiday shopping season.  “Post holiday, we saw a progressively stronger retail environment,” said Laura Alber, the company’s chief executive officer, which reported record earnings for 2011.  Sales increased 1.6 percent at automobile dealers, reversing the previous month’s decline.  The results fell short of what the industry expected.  Cars in February sold at the fastest pace in four years, led by Chrysler and a surprise gain from General Motors. Light-vehicle sales accelerated 6.4 percent from January to a 15 million annual rate, the strongest since February 2008, according to Ward’s Automotive Group.

“There are a number of factors that are helping release this pent-up demand,” said Don Johnson, vice president of GM’s U.S. sales.  “They include stronger employment, good credit availability, and both of those are leading to improving consumer sentiment.”

Clothing store purchases rose 1.8 percent, the most since November 2010.  Furniture and general merchandise stores were the only categories to show a decrease in sales.  An improved employment and income picture are giving consumers the confidence to spend more. This is demonstrated by the fact that the Bloomberg Consumer Comfort Index rose to an almost four-year high in the week ended March 4.

Employers boosted payrolls more than forecast in February.

Dean Maki, chief U.S. economist at Barclays Capital Inc. and a former Fed researcher who specialized in consumer spending, projects Americans will boost purchases at a three percent yearly rate in the 2nd half of the year after a 2.5 percent gain in the first six months.

Federal Reserve policymakers are likely to retain their plan to keep interest rates low at least through late 2014.  Chairman Ben S. Bernanke said maintaining monetary stimulus is warranted even with employment gains and a lower jobless rate.  While there are “some positive developments in the labor market,” Bernanke said, “the pace of expansion has been uneven.” The rise in gas prices “is likely to push up inflation temporarily while reducing consumers’ purchasing power,” he said.

“We believe that the consumer is in better shape than recent downbeat commentary from Fed Chairman Bernanke,” said John Ryding and Conrad DeQuadros, analysts with RDQ Economics. Another Commerce Department report showed U.S. companies restocked at a faster rate in January, a sign that businesses expect stronger job growth to fuel more sales.  Business stockpiles rose 0.7 percent in January, while sales grew 0.4 percent.  For the remainder of 2012, JPMorgan Chase analysts forecast growth of 2.2 percent, an improvement from the 1.7 percent growth seen in 2011.

The rise in sales “signals that the improving economic fundamentals, particularly strong employment growth, are being translated into higher spending activity,” said Millan Mulraine, senior macro strategist at TD Securities. “This building momentum is especially encouraging for the recovery as it suggests that the self-reinforcing positive dynamics between jobs growth and spending activity could foster a more robust economic recovery in the coming months.”

Retailers Take a Hit; Specialty Shops on the Move

Monday, June 2nd, 2008

Have you noticed that some of your favorite stores are disappearing?  Tough economic times have made people rethink their discretionary spending, and that is impacting specialty retailers.  According to a study by Commercial Property News and Claritas, a CPN-sister company specializing in retail-related demographic and marketing research, retailers are rethinking their 2008 growth plans.

The Standard & Poor’s Rating Services sees higher mortgage payments and rising energy prices slowing U.S. consumer spending by 2.2 percent during 2008.  Because consumer spending makes up 71 percent of the global domestic product (GDP), even a slight slowdown will impact other economic segments.

National retailer Talbots, Inc., plans to close 100 under-performing locations.  Similarly, The Gap is closing some locations, including several Old Navy and Banana Republic stores.  Conversely, specialty market segments are performing surprisingly well.  Talbots may open 35 Talbots Woman stores and 40 Talbots Premium Outlet locations over the next three years.

Consumer electronics sales are also down, with the International Council of Shopping Centers forecasting only two percent growth this year.  That contrasts with the three percent increase last year, and less than one-third of the 6.6 percent growth rate reported during 2006.