More of the same conspiracies...depending on who you talk to of course. <ng>
Retail Sales in U.S. Rise More Than Expected in Biggest Gain Since October
U.S. Economy: Retail Sales Rise Biggest in Six Months
from Bloomberg
By Monee Fields-White
Washington, May 14 (Bloomberg) -- U.S. retail sales surged in April at the fastest pace in six months, suggesting second-quarter economic growth may exceed expectations.
Last month's 1.2 percent sales gain, spurred by purchases of cars, clothing and building materials, followed a 0.1 percent increase in March, the Commerce Department said. Excluding autos, sales rose 1 percent after increasing 0.3 percent a month before.
``Second-quarter growth is going to be a bit stronger than what's expected, with the consumer leading the way,'' said Scott Brown, an economist at Raymond James & Associates in St. Petersburg, Florida. Consumer spending accounts for two-thirds of gross domestic product.
Wal-Mart Stores Inc. and J.C. Penney Co. reported increased earnings in the most recent quarter and automakers including General Motors Corp. are luring customers with discounts. Stocks surged after the report indicated profits may increase, while Treasury securities fell on expectations that Federal Reserve policy makers will raise interest rates as early as August.
Consumer spending may be rising at a 4 percent annual rate in the current quarter, faster than in the first three months of the year, said Joseph Lavorgna, a senior economist at Deutsche Bank Securities in New York. Second-quarter GDP may expand at about the same pace, he said.
Spending grew at a 3.5 percent rate in first quarter, following a 6.1 percent pace in last year's fourth quarter. That was the strongest since the period from April through June 1998. Retail sales are just a portion of total consumer spending.
Manufacturing May Gain
Manufacturing is expected to increase as businesses stop reducing inventories and demand stays strong. A report tomorrow from the Fed will probably show a 0.4 percent increase in April industrial production, the fourth straight monthly rise.
A jump in second quarter spending may mean the economy will expand faster than the current Blue Chip Economic Indicators forecast of a 3.1 rate. Gross domestic product grew at a 5.8 percent pace in the first quarter and slower second-quarter growth is expected because of sluggish business investment, fewer home sales and a wider trade deficit, the Blue Chip survey said.
The rise in April retail sales was the biggest since an auto- led surge of 6.2 percent six months ago. ``It's Christmas in April,'' said Richard Yamarone, chief economist at Argus Research Corp., an independent equity research firm in New York.
Stronger consumer spending helped boost earnings at Wal-Mart, the company reported today. First-quarter earnings at the largest retailer rose 20 percent, while sales in the period ended April 30 increased 14 percent, the company said in a press release distributed by PR Newswire.
Stocks Rise
The Dow Jones Industrial Average rose 189 points, or 1.9 percent, to close at 10298.90. The Nasdaq Composite Index jumped 67 points, or 4 percent, to close at 1719.06. The Treasury's 4 7/8 percent note maturing in February 2012 fell 1/2 point, pushing up its yield 7 basis points to 5.29 percent.
The Fed's 11 reductions last year in the benchmark overnight bank lending rate lowered borrowing costs for consumers and bolstered spending. The target rate, at 1.75 percent, is the lowest in 40 years. The Fed next meets on June 26 and trading in federal funds futures shows investors are expecting a quarter- percentage-point rate increase at the Aug. 13 meeting.
Sales at motor vehicle and auto parts dealers jumped 1.9 percent in April, the biggest gain since October of last year, after falling 0.8 percent. Cars and light trucks sold at a 17.3 million annual rate in April, up from a 16.4 million pace in March and the strongest since November, according to industry figures. General Motors reported a 13 percent gain last month.
Auto Discounts
Automakers, who offered discounts of as much as $2,500 on many models last month, have continued the incentives after posting the second-best sales year ever in 2001. Higher prices may have also lifted the value of sales at dealers. DaimlerChrysler AG's Chrysler arm said in March that it raised prices on most vehicles by 1.1 percent, and General Motors has said it increased prices on some sport-utility vehicles.
Higher prices also help explain the increase in value of sales at gas stations. Sales at service stations rose 2 percent last month after rising 4 percent in March. The price of gasoline at the pump rose to a high of $1.41 a gallon during the month from March's high of $1.34 a gallon, according to Department of Energy statistics.
Excluding the increases at auto dealers and gas stations, retail sales rose 0.9 percent in April after no change a month earlier. That was the biggest gain since January.
Gasoline Sales
Retail gasoline will probably rise another 8 cents to 10 cents by June as consumer demand increases toward its annual peak, the Energy Department said in its monthly forecast report.
Sales at general merchandise stores increased 1.2 percent after rising 0.1 percent. Sales at department stores rose 0.6 percent after falling 0.5 percent.
April same-store sales at May Department Stores Co., which owns Hecht's and Lord & Taylor stores, were 3.9 percent higher than a year ago. Sales at J.C. Penney stores open at least a year were 5.5 percent higher in April than the same month a year ago, the company said. The second-largest U.S. department store's first- quarter net income more than doubled as the company sold more housewares and apparel.
Net income rose to $86 million, or 29 cents a share, from $41 million, or 13 cents, a year earlier. Sales increased 2.7 percent in the period ended April 27, the company said in a press release distributed by Business Wire.
Same-store sales are closely followed because they exclude results from new and closed locations.
Building Materials
Today's report showed sales at building materials and supplies stores increased 2.7 percent after rising 1.7 percent. Sales at health and personal care outlets rose 1.9 percent and sales at restaurants and bars increased 0.6 percent in April.
Today's report also showed sales at electronics and appliances stores rose 0.1 percent.
Still, Fed policy makers aren't sure the pace of spending will continue. ``The degree of the strengthening in final demand over coming quarters, an essential element in sustained economic expansion, is still uncertain,'' the Fed said in a statement last week after holding the line on rates.
The jobless rate has increased since February and that's restraining incomes. Personal income rose 0.4 percent in March, the slowest this year, and wages and salaries increased 0.2 percent.
Best Regards, J.T. |
