U.S. Economy: Sales Unexpectedly Fall on Job Losses
Posted in the Economy Forum
#1 Aug 13, 2009
Aug. 13 - Sales at U.S. retailers unexpectedly fell in July, raising the risk that a lack of consumer spending will temper a recovery from the worst recession since the 1930s.
Purchases decreased 0.1 percent, the first drop in three months, as shrinking demand at department stores such as Macy’s Inc. and Wal-Mart Stores Inc. overshadowed a boost from the cash-for-clunkers automobile incentive program, Commerce Department figures showed today in Washington.
A separate government report today showed more Americans than forecast filed claims for unemployment insurance last week, underscoring the threat to spending from the continued deterioration in the job market. Treasury securities jumped and the dollar fell after the reports, and some economists lowered estimates for growth this quarter.
“Until we start seeing job growth, consumers are still going to be very cautious,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto, which accurately forecast the drop in purchases excluding automobiles.“It’s premature to talk about the sustainability of a recovery,” he said, until there’s “follow-through on the demand side.”
The gain in Treasuries sent the yield on the benchmark 10- year note down to 3.60 percent at 5:15 p.m. in New York from 3.72 percent late yesterday. The dollar dropped against the Japanese currency to 95.48 yen from 96.07 yesterday. Stocks rose, with the Standard & Poor’s 500 Index increasing 0.7 percent to a 10-month high of 1,012.73.
The Labor Department said today that 558,000 people filed first-time claims for jobless benefits last week, up from 554,000 the week before.
Retail sales were projected to rise 0.8 percent, according to the median estimate of 76 economists in a Bloomberg News survey. Forecasts ranged from a decline of 0.9 percent to a gain of 2 percent. Commerce revised June sales up to show a gain of 0.8 percent from the 0.6 percent increase previously reported.
Excluding automobiles, sales fell 0.6 percent, also worse than anticipated and the biggest drop since March. They were forecast to increase 0.1 percent, according to the survey.
Americans cut back on furniture, electronics, building materials, groceries and sporting goods in July, according to the report. The drop in sales at department stores, at 1.6 percent, was the biggest this year.
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