Retail Sales Probably Rose on Auto Demand: U.S. Economy Preview

June 7 (Bloomberg) -- Sales at U.S. retailers probably rose in May for the first time in three months as demand for automobiles picked up, economists said before a government report this week.

Purchases climbed 0.5 percent, according to the median of 61 estimates in a Bloomberg News survey ahead of Commerce Department figures due June 11. Another report may show the trade gap widened in April, reflecting an increase in the cost of imported oil.

Shoppers returned to Chrysler LLC and General Motors Corp. showrooms looking for bargains as some dealers slashed prices leading up to the automakers’ restructuring. Smaller job cuts and government stimulus measures may give consumers the confidence and means to sustain spending and help pull the economy out of the recession.

“Consumers are out there spending again,” said Ellen Zentner, a senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “They are clearly feeling better about the health of their finances.”

The Labor Department reported last week that employers eliminated 345,000 jobs in May, the fewest since September and a sign the recession is abating. Retailers cut 17,500 positions, the smallest reduction since June 2008, the month before purchases started to sink.

Sales of cars and light trucks rose to a 9.9 million annual unit pace in May from a 9.3 million rate the prior month, according to industry figures released last week. Purchases reached a 9.1 million pace in February, the lowest level since December 1981.

Smaller Declines

General Motors, Chrysler and Ford Motor Co., the only major U.S. automaker not in bankruptcy, all had smaller declines than forecast in comparison with May 2008.

“It’s just a slight uptick,” Ken Czubay, Ford vice president of sales and marketing, said on a conference call last week. “This is still a very fragile industry.”

Commerce’s report may also show that, excluding automobiles, sales rose 0.2 percent last month, according to the median estimate of economists surveyed. The increase is likely to in part reflect an increase in service-station receipts as gasoline prices climbed.

The International Council of Shopping Centers last week said May same-store sales dropped 4.6 percent from the same month last year, more than double its forecast of a 2 percent decline. Macy’s Inc., Dillard’s Inc. and Saks Inc. were among merchants that reported steeper declines than analysts estimated as Americans focused on buying essentials rather than discretionary items.

Buying Necessities

With home values falling, credit tight and unemployment at a 25-year high of 9.4 percent and forecast to keep rising, consumers are reluctant to spend on anything beyond necessities such as gasoline and food.

Wal-Mart Stores Inc., the biggest retailer, projected last month that its U.S. comparable-store sales may rise as much as 3 percent in the 13 weeks through July 31.

As the economy steadies and oil prices climb, imports are likely to rise. The trade deficit probably widened to $29 billion in April, according to economists surveyed, from $27.6 billion the prior month. Commerce will release that report on June 10.

Business inventories probably shrank 1 percent in April, an eighth consecutive decrease, as companies continued to draw down stockpiles in the face of weak demand, economists said the Commerce Department’s report will show the following day.

More Expensive

A report from the Labor Department on June 12 may show the cost of imported goods rose 1.4 percent in May, due mainly to higher oil prices, the survey showed. Import prices increased 1.6 percent the prior month.

Rising stock prices and signs the economy may have bottomed are boosting consumer confidence. The Reuters/University of Michigan preliminary sentiment gauge for June may rise to 69.5, the highest reading since September, from 68.7 in May, according to economists surveyed before the June 12 release.

“Our expectation is that we’ll begin to see growth in the economy,” Federal Reserve Chairman Ben S. Bernanke told Congress last week. “Underlying that prediction is some stabilization in final demand, including consumer spending.”