June 12 (Bloomberg) -- Retail sales in the U.S. rose twice as much as forecast in May as Americans snapped up electronics, clothes and furniture, evidence that they aren't hoarding their tax-rebate checks or using them just to pay for gasoline.
Purchases climbed 1 percent, the most in six months, following a 0.4 percent April gain that was previously reported as a drop, the Commerce Department said in Washington. Sales excluding gasoline increased 0.8 percent last month.
The figures suggest that consumers, whose spending accounts for more than two-thirds of the economy, are helping stave off a deeper downturn. Stocks rose, while Treasury notes slumped as the report reinforced investors' expectations that the Federal Reserve will increase interest rates later this year.
``It's just amazing -- the American consumer's resilience in the face of everything negative,'' Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, said in an interview with Bloomberg Television.
The decline in Treasuries sent benchmark 10-year note yields rising to 4.18 percent at 11:54 a.m. in New York, from 4.07 percent late yesterday. The dollar gained 0.9 percent to $1.5417 per euro. The Standard & Poor's 500 retailing index, which includes Target Corp. and Lowe's Cos., jumped 2.5 percent to 388.65. The S&P 500 index climbed 1.2 percent.
Import Prices
A separate report today showed that prices of goods imported to the U.S. rose 2.3 percent in May from the previous month, less than economists had forecast.
Initial claims for unemployment benefits rose to 384,000 last week from 359,000 the prior week, the Labor Department also reported today.
Today's sales report showed demand at every merchant category increased last month, except for miscellaneous retailers. Excluding autos, sales rose 1.2 percent, also exceeding the median forecast of a 0.7 percent rise.
Wal-Mart Stores Inc., the world's largest retailer, had a 3.9 percent jump in same-store sales last month, as consumers bought cut-rate staples and took advantage of promotions linked to the tax rebates.
``Many of our customers need to live from paycheck to paycheck,'' Wal-Mart Chief Financial Officer Thomas Schoewe told reporters last week. ``The amount they're spending on basics is a big portion of the total basket.''
Toys ``R'' Us Inc., the largest U.S. toy-store chain, this week said it posted a narrower first-quarter loss as sales for the three months that ended May 3 climbed 5.3 percent to $2.72 billion. Costco Wholesale Corp., the largest U.S. warehouse-club chain, said last week May sales at stores open at least a year rose 9 percent, beating analysts' estimates.
Bernanke Assessment
Today's figures bear out Fed Chairman Ben S. Bernanke's assessment this week that risks of a ``substantial downturn'' have receded.
Morgan Stanley economists raised their estimate for second- quarter economic growth after the report to 0.5 percent from a 0.2 percent contraction.
Bernanke, Fed Vice Chairman Donald Kohn and at least three district-bank presidents this week warned that the central bank must keep inflation expectations in check. The remarks stoked investors' bets on a rate boost in the second half of 2008.
Traders see a 94 percent chance the Fed will raise its main rate from 2 percent by the end of the September meeting, futures contracts show.
Purchases of electronics increased 0.7 percent and sales at department stores jumped 1.2 percent, the most since March 2007. Building-material retailers sold 2.4 percent more than in the prior month.
Car Sales
Sales at automobile dealerships and parts stores increased 0.3 percent after dropping 2.1 percent in April. That contrasts with industry figures that showed cars and light trucks sold at an annual pace of 14.3 million annual pace in May, the fewest in almost a decade, as sales of pickup trucks and sport-utility vehicles plummeted.
The surge in fuel costs is ``a structural change, not just a cyclical change,'' General Motors Corp. Chief Executive Officer Rick Wagoner said June 3 as Detroit-based GM said it would close four North American pickup and large SUV factories and focus more on making small, fuel-efficient cars.
Filling station sales surged 2.6 percent in May. Regular gasoline reached as high as $3.98 a gallon in late May, about 53 cents more than the average for the prior month, according to AAA.
GDP Impact
Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product, sales climbed 0.8 percent, after a 1 percent increase the prior month. The government uses data from other sources to calculate the contribution from the three categories excluded.
Most economists aren't convinced the jolt from the stimulus checks will last.
``This good report suggests the tax rebates are having an impact,'' Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania, said in a Bloomberg Radio interview. ``As these tax-rebate effects fade, the weaker job market is going to take over.''
The Fed's Beige Book regional business survey yesterday indicated the economy was ``generally weak'' in late April and May as consumer spending slowed. Still, five of the 12 districts reported that growth was ``stable,'' an increase from three in the previous survey, issued April 16.
Spending may grow at an annual rate of 0.8 percent this quarter, down from a 1 percent pace in the prior quarter and the weakest since the first three months of 1995, according to the median estimate of economists surveyed by Bloomberg News this month.
The bulk of the tax rebates will probably be spent from July through September, giving third-quarter growth a lift, before the economy decelerates again in the last three months of the year, the Bloomberg poll also showed.
To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
No comments:
Post a Comment