U.S. retail sales rose last month and
initial jobless claims unexpectedly declined to the lowest level
in five weeks, signs that the economic expansion regained momentum
in the third quarter.
Retail sales increased 0.7 percent to a $336.5 billion annual
rate as Americans spent more on cars and furniture, the Commerce
Department said in Washington. June sales fell 0.5 percent instead
of the 1.1 percent drop first reported. The number of Americans
seeking unemployment benefits for the first time fell by 4,000 to
333,000 last week, the Labor Department said.
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Sales “bode well for the second half of the year,” H. Lee
Scott, chief executive officer of Wal-Mart Stores Inc., said on a
recording after the world’s largest retailer reported quarterly
profit rose 16 percent.
Consumer spending may be recovering after expanding last
quarter at the slowest pace since the 2001 recession, said
economists including David Greenlaw of Morgan Stanley in New York.
The Federal Reserve this week raised its benchmark interest rate
for the second time this year, betting in part that oil prices
that hurt consumers and reached a record again Thursday may subside.
July’s retail report “provides a better ramp heading into
the third quarter,” said Greenlaw, the firm’s chief U.S. fixed
income economist. Consumer spending now may grow at a 4.3 percent
annual pace this quarter compared with a previously estimated gain
of 3.5 percent, he said.
Inventories at U.S. companies increased in June by the most
in four years as retail sales fell that month, the Commerce
Department said Thursday. U.S. companies paid 0.2 percent more for
imported goods and materials last month than in June, as prices
for oil, chemicals and metals rose, the Labor Department said.
Both the Fed and Wal-Mart’s Scott based their optimism in
part on the idea that rising energy prices that have hurt consumer
spending are temporary. Crude oil prices reached a record $45.50 a
barrel Thursday on the New York Mercantile Exchange.
“If oil stays up so high and households and businesses start
assuming this is a permanent, not temporary, price hike, there
will be adjustments to demand,” said Joel Naroff, president of
Naroff Economic Advisers in Holland, Pa. “The greatest
risk to the economy is not the economic fundamentals, which remain
solid, but the energy” prices, he said.
Amy Beebe, a 37-year-old stay-at-home mom from Delran, N.J., said she is buying more items on clearance at Wal-Mart to
save money. The continued high price of gasoline “affects your
pocketbook, but I don’t stop going,” she said in an interview.
Initial jobless claims fell for a second straight week and
were the lowest since the week ended July 2, the Labor Department
said. The median forecast was for claims to rise to 340,000. The
four-week moving average fell to 339,250 from 343,500.
Auto sales rose in July as General Motors Corp. and other
automakers boosted discounts after cars and light trucks sold in
June at the slowest pace in six years. The average incentive was
$3,991 per vehicle during the first half of July, up from $3,667
in June and $3,983 in July 2003, according to CNW Marketing
Research in Bandon, Ore.
Excluding vehicles and parts, July sales rose 0.2 percent
after rising 0.3 percent a month earlier. Sales excluding
automobiles were forecast to rise 0.4 percent after an initially
reported 0.2 percent drop in June, according to the median
forecast in a Bloomberg survey.
Sales at automobile dealerships and parts store rose 2.4
percent last month after falling 3 percent. Furniture sales
increased 1.1 percent after rising 2.6 percent.
Sales at electronics and appliance stores rose 0.2 percent
after a 0.7 percent rise. Purchases at sporting goods, hobby, book
and music outlets advanced 1.3 percent while sales at food and
beverage stores increased 0.1 percent. Sales at restaurants and
bars rose 0.6 percent after rising 0.2 percent a month earlier.
Bloomberg News
