Sales at U.S. retailers rose in March for a ninth consecutive month, showing the improving job market is helping Americans cope with higher costs for fuel and food.
Purchases increased 0.4 percent following a 1.1 percent February gain that was larger than previously estimated, Commerce Department figures showed today in Washington. The median forecast of 82 economists surveyed by Bloomberg News was a 0.5 percent rise. Sales excluding automobiles and gasoline advanced more than projected.
Declining unemployment and a cut in payroll taxes for 2011 are helping sustain sales at chains like Macy’s Inc. (M) and Saks Inc. (SKS) At the same time, mounting gasoline and grocery bills are eroding confidence and pinching wallets, making it likely consumer spending, the biggest part of the economy, cooled in the first quarter from the final three months of 2010.
“The consumer was more resilient in March than some of our concerns,” said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston. “Improving labor- market conditions are helping support consumption. This is a very impressive pace of spending, with gains across a diverse range of products.”
Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in June rose 0.7 percent to 1,317.7 at 8:46 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 3.54 percent from 3.49 percent late yesterday.
Survey Results
Retail sales were projected to rise after a 1 percent gain previously reported for February, according to the Bloomberg survey. Economists’ estimates ranged from a drop of 0.5 percent to a 2 percent gain.
Sales excluding automobiles and service stations climbed 0.6 percent, exceeding the 0.5 percent median forecast of economists surveyed. The February reading was revised up to 0.9 percent from a previously estimated 0.6 percent increase.
Ten of 13 major categories showed gains last month, led by the biggest increase in furniture demand since 2004 and the largest advance in sales of electronics in a year.
Filling station sales climbed 2.6 percent. Higher gasoline prices contributed to the projected gain in retail sales, which include purchases at filling stations and aren’t adjusted for inflation.
Gasoline Prices
The cost of regular fuel averaged $3.54 a gallon in March, up from $3.18 the prior month, according to AAA, the nation’s biggest motoring organization. The price jumped to $3.79 a gallon on April 11, the highest since September 2008.
Sales fell 1.7 percent at automobile dealers, today’s report showed. That’s consistent with industrywide light-vehicle sales, which ran at a seasonally adjusted annual rate of 13.1 million in March, down from 13.4 million the prior month, according to researcher Autodata Corp.
Nonetheless, auto demand has improved from last year. Sales at Dearborn, Michigan-based Ford Motor Co. (F) climbed 16 percent in March from the same time in 2010, outpacing Detroit-based General Motors Co. (GM)’s 9.6 percent gain.
“We continue to see good, solid signs of progress despite some of the challenges,” Don Johnson, GM’s vice president of U.S. sales operations, said on an April 1 conference call. “A recovering job market is going to be the most important factor for the U.S. economy at this stage, and we do anticipate that this is going to continue to improve.”
More Jobs
The economy created 216,000 jobs in March, the most since May 2010, while the jobless rate fell for a fourth straight month to a two-year low of 8.8 percent, Labor Department data showed April 1.
Purchases excluding autos increased 0.8 percent, today’s report showed. They were projected to rise 0.7 percent.
Excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, sales rose 0.4 percent after a 1.1 percent increase the prior month that was almost twice as large as previously estimated.
Industry reports last week showed stores fared better than forecast. Retailers’ sales at stores open at least a year rose 2.2 percent from March 2010, while the average projection was for a 0.5 percent drop, according to Retail Metrics Inc. Analysts projected a decrease because an early Easter in 2010 had pulled sales into March that would normally have taken place in April.
Cincinnati-based Macy’s, the second-largest U.S. department- store chain, reported same-store sales rose, while analysts forecast a decline. Luxury retailers Saks, Nordstrom Inc. (JWN) and Neiman Marcus Group Inc. also topped estimates.
Customers Struggling
Wal-Mart Stores Inc. (WMT), the world’s biggest retailer, is among chains saying customers are feeling the pinch from rising fuel expenses.
“We still see our customer financially strapped,” Rosalind Brewer, president of the Bentonville, Arkansas-based company’s Wal-Mart East division, said in an investor presentation on April 12. We see the shopper’s “wallet being stretched a lot more.”
Federal Reserve officials noted in minutes of their March 15 meeting that “while participants expected that household spending would continue to expand, the pace of expansion was uncertain.”
Source: Bloomberg By
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