US retail sales rose more than forecast in July
RETAIL SALES in the US rose more than forecast in July, reflecting broad-based gains that ease concern that elevated unemployment will cause consumers to retrench.
The 0.8 per cent advance, the biggest since February and first gain in four months, followed a 0.7 per cent decrease in June, US commerce department figures showed yesterday.
Economists projected a 0.3 per cent rise, according to the median forecast in a Bloomberg survey. Purchases climbed in all 13 categories, the first time since 2005.
Improved sales at merchants such as Gap and TJX indicate US households are looking beyond the global economic slowdown as hiring improves. At the same time, joblessness in excess of 8 per cent is keeping consumer spending from surging, consistent with the US Federal Reserve’s view that economic growth will “remain moderate over coming quarters”.
“The consumer hasn’t exactly thrown in the towel, which is encouraging because they’ve been battered and bruised in recent months with very slow job growth and a cloud of uncertainty,” said Millan Mulraine, senior US strategist at TD Securities in New York.
Yesterday’s report showed the retail sales category used to calculate gross domestic product, which excludes sales at car dealers, building material stores and service stations, rose 0.9 per cent, the biggest gain since January, after a 0.2 per cent drop in June.
Economists at Morgan Stanley in New York raised their tracking estimate for growth in the third quarter to a 1.9 per cent annual rate after yesterday’s report from a previous estimate of 1.7 per cent.
Their counterparts at Goldman Sachs Group boosted it to 2.3 per cent from 2.2 per cent.
Wholesale prices also rose, climbing 0.5 per cent in July from the same month last year, the smallest year-to-year increase since October 2009, the US labour department reported.
Inventories at US companies rose 0.1 per cent in June following a 0.3 per cent gain in May, commerce department data showed.
Sales at Gap, the biggest US speciality apparel retailer, climbed 10 per cent last month from the same period in 2011. Macy’s, the owner of its namesake and Bloomingdale’s department stores, posted a 4.1 per cent increase.
Underpinning consumer demand, payrolls increased by 163,000 in July, the most in five months, according to labour department figures. While the improvement eased fears that the US labour market may continue stumbling following the second-quarter slowdown, the jobless rate rose to 8.3 per cent. – (Bloomberg)