Dollar was flat, ahead of this announced drop in retail sales (FWIW, gold seems to be in an uptrend):
U.S. Retail Sales Fell 0.3% in May; Sales Ex-Autos Unchanged
By Siobhan Hughes
Washington, June 13 (Bloomberg) -- Sales at U.S. retailers fell in May for a
second straight month as consumers purchased fewer automobiles and other
big-ticket items, government figures showed today.
Total sales declined 0.3 percent in May following a revised 0.6 percent decrease
in April, the Commerce Department reported. April's decline was the largest in
almost two years. Excluding autos, sales were unchanged in May after a revised
0.4 percent decrease in April.
After six interest-rate increases by the Federal Reserve in the past year, the
``medicine is working and the Fed won't have to raise interest rates anymore,''
said Cynthia Latta, an economist at Standard & Poor's DRI in Lexington,
Massachusetts, before the report.
Not since July-August 1998 have retail sales fallen in two consecutive months.
Sales of big-ticket durable goods, which are more sensitive to changes in interest
rates because they are typically financed, have fallen for three straight months.
Consumer spending grew at its fastest pace in 15 years in the first quarter. That
helped power the economy, now in a record tenth year of expansion, to a 5.4
percent annualized gain in the first quarter.
Analysts expected May sales to be unchanged at $268.1 billion. They also
expected 0.4 percent gain outside of automobiles to $201.9 billion. April's decline
was the largest since a 0.8 percent plunge in July 1998, Commerce officials said.
Federal Reserve
The sales report surfaces ahead of the Fed's monetary policy meeting later this
month. The Fed's Open Market Committee last raised the overnight bank lending
rate in May to 6.5 percent, the highest in nine years, in an effort to head off the
threat of accelerating inflation. The central bankers next meet on June 27- 28.
Those rate increases are starting to weigh on sales. Home Depot Inc. fiscal
second-quarter same-store sales may fall short of an expected 7 percent
increase because of rising interest rates, Mark Mandel, an analyst at Robinson
Humphrey, wrote in a report.
``The weight of repeated interest-rate hikes is finally being felt in the consumer
sector,'' Mandel wrote.
Last month's slump in sales was led by a 1.3 percent decrease in car and truck
sales, which followed a 1.2 percent drop in April. Auto sales fell in May to 17.1
million units at an annual rate from April's 18 million-unit pace.
General Motors Corp., the world's largest automaker, said sales of cars and
trucks built in North America dropped 5.9 percent in May, as price breaks failed
to draw buyers to its Oldsmobile and Buick cars.
Sales of building materials declined 1.6 percent and sales of furniture decreased
0.3 percent in May. Sales of durable goods fell 1 percent after a 1.2 percent
decrease in April. Sales of non- durable goods rose 0.2 percent following a 0.1
percent decrease in April.
Gasoline
The dollar value of May sales at gasoline service stations rose 0.3 percent as
consumers paid more per gallon than a month earlier. At the end of May, the
average weekly price on a gallon of gasoline was $1.538 compared with $1.437
at the end of April.
Sales at clothing stores increased 1.1 percent in May after a 0.9 percent fall the
previous month.
Meantime, Bank of Tokyo-Mitsubishi Ltd. reported earlier this month that sales at
retail stores open at least a year rose 4.6 percent in May from a year earlier,
down from April's sales gain of 7.9 percent.
Among retailers such as Saks Inc., Gap Inc. and May Department Stores Inc.,
sales rose at a slower pace in May than the average pace of the first four months
of the year when same- store sales averaged 5.4 percent.
Circuit City Group, an electronics retailer, said this month that sales of
appliances such as refrigerators and air conditioners have slowed.
Abercrombie & Fitch Co., which sells clothes for college-age adults, said
yesterday that same-store sales will decline during the remainder of the spring
and summer season, mainly because of low demand for women's apparel.
``We expect sales to be negative for the balance of the spring and summer
season,'' said Mike Jeffries, the company's chairman and chief executive officer,
at a U.S. Bancorp Piper Jaffray conference in Minneapolis.
Sales Versus Last Year
While today's retail sales report suggests the economy may be slowing, sales
are still 7.4 percent higher in May than a year ago. ``Consumers are still buying a
lot more than last year,'' said Don Hilber, economist at Wells Fargo & Co. in
Minneapolis, before the report.
Spending has been bolstered by an unemployment rate that's close to a 30-year
low, near-record consumer confidence in the economy, and an increase in wealth
tied to years of stock market gains.
This year, though, stocks are lower. The Dow Jones Industrial Average is down
almost 8 percent this year, while the Nasdaq Composite Index has fallen 7
percent.
``Consumers may be a little concerned the stock market isn't so assured to keep
going up,'' said Cynthia Latta, an economist at Standard & Poor's DRI in
Lexington, Massachusetts. |
