Retail Sales Probably Increased in April (zt)

Retail Sales Probably Increased in April: U.S. Economy Preview

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By Timothy R. Homan

May 9 (Bloomberg) -- Sales at U.S. retailers probably rosein April for a seventh straight month, pointing to a rebound inconsumer spending that is broadening the recovery, economistssaid before reports this week.

Purchases increased 0.2 percent in April, extending themost successive gains since 1999, according to the medianestimate of 60 economists surveyed by Bloomberg News beforeCommerce Department figures on May 14. Other reports may showmanufacturing picked up and the trade gap was little changed.

The biggest increase in payrolls in four years may be aharbinger of additional gains as employers become more certainsales will grow, which in turn will lift wages and consumerspending further. Electronics stores may have led retailers lastmonth as Apple Inc. sold at least 1 million iPads.

“Retail sales are picking up because of income growth,”said Dean Maki, chief U.S. economist at Barclays Capital in NewYork. “Consumption is going to be growing at a firm pacethrough the end of the year. We are in a sustainable recoverynow.”

Cupertino, California-based Apple said it sold out of allthree versions of the iPad 3g, which went on sale two weeks ago,at its retail stores in 13 U.S. cities.

“Demand continues to exceed supply,” Natalie Kerris, aspokeswoman for Apple, said May 6. “We’re working hard” toprovide iPads to additional customers, she said.

Government Rebates

A remnant of last year’s government stimulus package mayhave also propelled sales of appliances last month, said MichaelFeroli, chief U.S. economist at JPMorgan Chase & Co. in NewYork. Almost two-thirds of the $300 million the governmentallotted for state rebates on purchases of energy efficientappliances became available last month, Feroli said in a May 3note to clients.

Florida’s rebate program ran out of funds in three dayslast month, while Texas and Illinois ran through the money in aday, he said. The incentives may boost core retail sales, whichexclude items such as autos, building materials and gasoline, by0.3 percentage point, according to Feroli.

One reason Americans are spending may be that theemployment outlook is brightening. Payrolls increased by 290,000in April, the most in four years, according to figures from theLabor Department last week. Unemployment climbed to 9.9 percentfrom 9.7 percent as thousands of jobseekers entered theworkforce.

Less Broad-Based

The increase in April sales may have been less broad-basedthan in prior months. Chain stores reported the smallestincrease in monthly sales since November, industry figuresshowed last week. Demand was dragged down by teen-clothingretailers Abercrombie & Fitch Co. and Aeropostale Inc., and anearly Easter, which boosted March sales at the expense of April.

The debt crisis in Europe also raises the risk thattumbling stock prices may cause households to rein in spending.Shares have been pummeled the past two weeks, with the Standard& Poor’s 500 Index dropping 8.7 percent since April 23.

“Clearly, a blossoming labor market recovery is a bigpositive,” economists Paul Ashworth and Paul Dales of CapitalEconomics Ltd. in Toronto, said in a note to clients last week.“But if equity and house prices continue to fall, householdswill ramp up their savings to compensate for the loss of wealth,perhaps undermining consumption.”

For now, more jobs may trump the drop in stocks. TheThomson Reuters/University of Michigan preliminary index ofconsumer sentiment for May probably rose to 73.5 from 72.2 theprior month, according to the survey median. The figures are dueMay 14.

Factory Gains

Manufacturing, which accounts for about 12 percent of theeconomy, continues to expand. A Federal Reserve report May 14may show production at factories, mines and utilities climbed0.6 percent in April, the tenth straight gain, according to thesurvey median.

The need to replenish depleted inventories, combined withrising business spending, is giving factories a lift. Stockpilesin the U.S. probably rose 0.4 percent in March, capping thefirst three-month gain since 2008, economists said ahead of aCommerce Department report on May 14.

Finally, the trade deficit in March was probably littlechanged at $40 billion, compared with $39.7 billion the priormonth, according to the survey median before a May 12 reportfrom the Commerce Department.

                       Bloomberg Survey

==============================================================
                        Release    Period    Prior     Median
Indicator                 Date               Value    Forecast
==============================================================
Trade Balance $ Blns      5/12     March     -39.7     -40.0
Federal Budget $ Blns     5/12     April     -20.9     -20.0
Initial Claims ,000’s     5/13     8-May      444       440
Import Prices MOM%        5/13     April      0.7%      0.8%
Retail Sales MOM%         5/14     April      1.9%      0.2%
Retail ex-autos MOM%      5/14     April      0.9%      0.4%
Retail exauto/gas MOM%    5/14     April      0.7%      0.4%
Ind. Prod. MOM%           5/14     April      0.1%      0.6%
Cap. Util. %              5/14     April     73.2%     73.7%
U of Mich Conf. Index     5/14     May P      72.2      73.5
Business Inv. MOM%        5/14     March      0.5%      0.4%
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To contact the reporter on this story:Timothy R. Homan in Washington at [e-mail]