US retail sales fall unexpectedly

US retail sales fall unexpectedly
By Simone Baribeau in New York
Copyright The Financial Times Limited 2009
Published: August 13 2009 13:33 | Last updated: August 13 2009 19:26
http://www.ft.com/cms/s/0/2761e976-87ff-11de-82e4-00144feabdc0.html


Data released on Thursday show the US still facing strong economic headwinds, as retail sales unexpectedly fell, weekly jobless claims unexpectedly rose, and foreclosures continue to roil the housing market.

US retail sales fell 0.1 per cent in July from June, according to a Commerce Department report, compared with analysts’ estimates of a 0.8 per cent gain.

Excluding auto sales, which were boosted by the popular cash-for-clunkers programme, US retailers fared even worse, dropping 0.6 per cent, compared with expectations of a 0.1 per cent gain on the month, on a seasonally-adjusted basis.

“That core retail sales have been this soft in recent months in spite of the tax cut implemented starting in April can hardly be described as a good showing,” said Joshua Shapiro, chief US economist, MFR, Inc. “Rather, it is clear that this fiscal boost is mostly being used to help fill the hole left by a decimated labor market and/or to help households whittle down debt burdens.”

Sales at petrol stations fell 2.1 per cent from June, and 32.5 per cent from last year, as the price of oil slipped in July, though it has since rebounded in August.

Initial weekly jobless claims unexpectedly ticked up in July, rising 4,000 to 558,000 for the week ending August 8. Economists surveyed by Bloomberg had forecast claims would drop to 545,000.

Last week, they had fallen by 38,000 to 550,000, a fall sharper than expected, but were since revised slightly upward to 554,000. The less volatile four-week moving average saw an even sharper increase of 8,500 to 565,000.

But claims remain 18 per cent below their peak levels in March, and unemployment has remained below 600,000 for its sixth straight week.

“Unemployment claims need to fall to around 350,000 to indicate the labour market has stabilised. We’re roughly a year away from that milestone,” said Joseph Brusuelas, director of Moody’s Economy.com.

Ongoing unemployment claims continued to fall, dropping 141,000 to 6.2m during the week ending August 1, though some remain concerned that the decrease is caused by people exhausting their benefits, rather than an improvement in the labour market. The four-week moving average saw a less steep decrease of 27,750.

Separately, US business inventories entered their tenth straight month of declines in June, falling by a slightly steeper than expected 1.1 per cent, as businesses continue to react to slowing demand. But sales, which are down 18 per cent on the year, ticked up 0.9 per cent in the month.

Foreclosure activity in the US hit a new record in July, setting its third monthly record in five months, RealtyTrac reported on Thursday.

Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, hit 360,149, an increase of 7 per cent from June and 32 per cent on the year. One in every 355 US homes received a foreclosure notice in July, according to the online marketplace for foreclosure properties.

California, Florida, Arizona and Nevada account for nearly 57 per cent of all foreclosure activity, the group said. Nevada, where one in every 56 homes received a foreclosure notice in July, still has the highest foreclosure rate.

The release comes the day after the National Association of Realtors reported that an increase in foreclosure sales led to a record 15.6 per cent decline in median home values to $174,100 in the second quarter from the year before. About 36 per cent of transactions in the second quarter were distressed sales, either foreclosures or short sales.