BLBG:Retail Sales in U.S. Rose in July for Fourth Consecutive Month
Retail sales rose in July for a fourth consecutive month, showing the U.S. economy is breaking free of the effects of higher taxes and federal budget cuts.
The 0.2 percent increase followed a 0.6 percent gain in June that was larger than previously reported, according to Commerce Department figures issued today in Washington. The median forecast of 81 economists surveyed by Bloomberg called for a 0.3 percent advance. The measure of demand that feeds into gross domestic product climbed by the most this year.
Employment gains and rising household wealth tied to higher home values and stock prices are giving Americans the confidence to spend, triggering improving sales at companies such as General Motors Co. and Ford Motor Co. A pickup in household purchases would help counter the fiscal headwinds of taxes and government cutbacks that have held back the world’s largest economy this year.
“We have benefits from higher home values and higher stock prices that are supporting household wealth,” Gus Faucher, senior economist at PNC Financial Services Group Inc. in Pittsburgh, said before the report. “Consumer spending is holding up.”
Estimates in the Bloomberg survey ranged from a drop of 0.1 percent to a 0.8 percent gain. The reading for June was revised from an initially reported 0.4 percent increase.
Nine of 13 major categories showed gains last month, led by clothing and general merchandise stores.
Economic Impact
Purchases excluding autos, gasoline and building materials, which render the figures used to calculate GDP, advanced 0.5 percent last month, the most since December, after increases of 0.1 percent in each of the previous two months.
Spending advanced 0.9 percent at clothing chains and 0.4 percent at general merchandise stores, today’s report showed.
Sales at automobile dealers fell 1 percent after rising 2.9 percent the prior month, today’s report showed. The figures don’t always track the industry data used to calculate economic growth because they can be influenced by prices.
Cars and trucks sold at a 15.7 million annualized rate last month after a 15.8 million pace in June, the strongest back-to-back readings since the end of 2007, according to figures from Ward’s Automotive Group.
“There’s still significant upside potential for cars,” Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities Inc. in New York, said before the report. “The volume of sales was so abnormally low over the past five years that there’s a lot of catch up to be done.”
Auto Sales
Improving sales have led GM, Ford, Chrysler Group LLC, and Honda Motor Co. to boost capacity. Chrysler is adding almost 300 jobs at a Michigan engine plant and Honda will invest $215 million at facilities in Ohio.
“We’re at the beginning of a broad-based recovery for the economy in auto retail,” said Michael Jackson, chairman and chief executive officer of AutoNation Inc., in Fort Lauderdale, Florida. The largest U.S. auto-dealership group last month reported record earnings per share in the second quarter. “As we look at the rest of 2013, we believe that the improvement in new vehicle sales will continue,” Jackson said on a July 18 earnings call.
Today’s report showed some weakness in housing-related categories as sales at furniture, appliance and building material stores declined.
Areas showing gains included restaurants and bars, grocery stores and sporting goods outlets. Within general merchandise, department stores showed a 0.6 percent increase in sales last month, the biggest since March 2012.
To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
