Newsdeck

US retail sales gain hints at stronger growth

By Reuters 14 August 2012

U.S retail sales rose in July for the first time in four months as demand climbed for goods ranging from cars to electronics, a sign that consumers could drive faster economic growth in the third quarter. By Jason Lange.

Sales rose 0.8 percent last month, the largest gain since February and well above analysts’ expectations, Commerce Department data showed on Tuesday.

A separate report showed U.S. producer prices increased in July at the fastest pace in five months even as energy prices fell.

The broad-based expansion in retail sales bolstered the view that the slowdown in economic growth during the second quarter will prove temporary.

“Here comes the U.S. consumer,” said Harm Bandholz, an economist at UniCredit in New York.

Consumer spending drives the U.S. economy, and the report could give some relief to President Barack Obama, whose November re-election bid against Mitt Romney, the presumptive Republican nominee, has been imperiled by a weak recovery.

But after a dismal spring, summer has brought more reassuring signs for the economy.

Hiring accelerated in July despite an uptick in the jobless rate, and Tuesday’s data added to uncertainty that the Federal Reserve will implement a third round of bond-buying, or quantitative easing, to stimulate growth.

“Today’s retail sales data further reduces the likelihood of QE3 in September, but does not take it off the table,” said Michelle Meyer, an economist at Bank of America in New York.

Fed policymakers meet next on Sept. 12-13.

Economists polled by Reuters had expected retail sales to rise 0.3 percent. U.S. stocks climbed on the data, as did yields on U.S. government debt. The dollar rose against the yen.

CAUTIOUS CONSUMERS

Pointing to a strong increase in consumer spending in July, the so-called core measure of retail sales – which excludes autos, gasoline and building materials – rose 0.9 percent. That was the biggest gain since January.

Stronger consumer spending would help corporations doing business in the United States. Home Depot Inc, the world’s largest home improvement chain, reported a quarterly profit that beat Wall Street views on Tuesday and raised its earnings outlook for the fiscal year.

Economic growth in the United States cooled to a 1.5 percent annual rate in the second quarter from a 2 percent pace in the first three months of the year, and economists are now banking on an acceleration.

In the retail report, the government said sales contracted more than previously thought in June, further darkening the view of the second quarter.

The Commerce Department said in another report that sales at all businesses slipped in June by the most since March 2009, which economists said should curb some enthusiasm over the jump in retail sales.

“Given that sales are only marginally higher since the start of the year, households clearly remain cautious,” said Amna Asaf, an economist with Capital Economics in Toronto.

And with good reason. Dark clouds continue to loom over the economic outlook.

The euro zone’s debt-ravaged economy shrank in the second quarter after flat-lining in the first, a report showed on Tuesday.

Europe’s travails have fueled economic uncertainty, and appear to be choking hiring in the United States.

U.S. small business sentiment fell for a third straight month in July as owners worried about sales revenue, according to a survey by the National Federation of Independent Business.

SOFTER ENERGY PRICES

By undercutting global growth, the debt crisis in the euro zone has also pushed oil prices lower since March.

While the Labor Department’s index of producer prices, which measures prices received by farms, factories and refineries, climbed 0.3 percent last month on higher costs for consumer goods and food, the gain was muted by a drop in energy prices.

Still, core inflation at the wholesale level accelerated in July. The core measure has held at higher levels even as a sharp drop in energy prices over the past year has pulled overall producer prices lower.

Some policymakers at the Fed worry that further moves to lower borrowing costs could fuel inflation, though the central bank has said it was ready to do more to help the economy if needed.

“This report suggests core inflation will persist despite price swings in food and energy,” said Cooper Howes, an economist at Barclays in New York. DM

Photo: A woman looks shops for clothes in the Harley-Davidson Manhattan store in New York December 5, 2011. REUTERS/Eduardo Munoz

Gallery

Watch Pauli van Wyk’s Cat Play The Piano Here!

No, not really. But now that we have your attention, we wanted to tell you a little bit about what happened at SARS.

Tom Moyane and his cronies bequeathed South Africa with a R48-billion tax shortfall, as of February 2018. It's the only thing that grew under Moyane's tenure... the year before, the hole had been R30.7-billion. And to fund those shortfalls, you know who has to cough up? You - the South African taxpayer.

It was the sterling work of a team of investigative journalists, Scorpio’s Pauli van Wyk and Marianne Thamm along with our great friends at amaBhungane, that caused the SARS capturers to be finally flushed out of the system. Moyane, Makwakwa… the lot of them... gone.

But our job is not yet done. We need more readers to become Maverick Insiders, the friends who will help ensure that many more investigations will come. Contributions go directly towards growing our editorial team and ensuring that Daily Maverick and Scorpio have a sustainable future. We can’t rely on advertising and don't want to restrict access to only those who can afford a paywall subscription. Membership is about more than just contributing financially – it is about how we Defend Truth, together.

So, if you feel so inclined, and would like a way to support the cause, please join our community of Maverick Insiders.... you could view it as the opposite of a sin tax. And if you are already Maverick Insider, tell your mother, call a friend, whisper to your loved one, shout at your boss, write to a stranger, announce it on your social network. The battle for the future of South Africa is on, and you can be part of it.


Comments

Please note you must be a Maverick Insider to comment. Sign up here or if you are already an Insider.

Load Shedding

Nobody can predict when the situation will stabilise

By Rebecca Davis

POLL PICKS RAMAPHOSA

ANC 61%, DA 18%, EFF 10% – Ipsos poll

Ferial Haffajee 17 hours ago

The ancient Greeks believed trousers to be "ridiculous". The Romans shunned them on account of only barbarians wearing the garment.