Posted on 09/14/2004 7:18:42 AM PDT by Pikamax
Retail Sales Down; Trade Gap Larger Tuesday September 14, 9:15 am ET By Jonathan Nicholson
WASHINGTON (Reuters) - U.S. retail sales dipped in August and the U.S. gap with its international trade partners widened to a record level in the second quarter of the year, government reports released on Tuesday showed. ADVERTISEMENT
The Commerce Department said retail sales fell 0.3 percent in August -- more than the 0.1 percent drop that Wall Street analysts had been projecting -- but sales excluding autos rose 0.2 percent, matching expectations.
July sales figures were also revised upward. July sales advanced 0.8 percent overall and 0.3 percent outside of cars, up from the previously reported 0.7 percent and 0.2 percent gains.
In a separate report, the department said the U.S. current account gap -- the broadest measure of trade and investment flows between the United States and the rest of the world -- widened again in the second quarter, growing to a record $166.18 billion. That was well above analysts' expectations for a $159.35 billion shortfall.
In foreign exchange markets, the dollar fell against both the euro and the yen after the reports' release. Prices for U.S. Treasury securities, turned lower as the retail sales data was not as weak as some traders had expected.
ASIDE FROM CARS...
In the retail sales numbers, economists focused on the ex-autos numbers as a sign that consumer spending was still holding up fairly well, despite reports earlier this month of disappointing back-to-school retail sales.
"There was a concern that perhaps the retail numbers would come in very weak. They didn't," said Kevin Logan, senior economist with Dresdner Kleinwort Wasserstein.
"You can't say this was a strong report ... (But) it eliminates some of the pessimism that might have been gripping the fixed income market, pessimism about the economy," he said.
Auto sales slid 1.9 percent in August, their biggest fall since June. Some other categories also showed weakness, including clothing, which dropped 1.4 percent, and department stores, which saw a 0.8 percent decline.
Still, other retail sectors picked up the slack. So-called non-store retailers -- Internet and catalog businesses -- saw sales rise 1.7 percent, while sales at health and drug stores were up 1.0 percent.
Despite setting a record, the current account gap figures did not appear to worry economists much.
"The bottom line on the current account is it's an all-time record. It just shows that the United States is continuing to rely on the world's savings to an increasing degree," said Sean Callow, currency strategist with IDEAglobal in New York.
While economists have long worried about the size of the current account imbalance, and have often said it will lead to a drop in the dollar's value in foreign exchange markets, the United States has continued to attract international investment. Net inflows of capital totaled $71.8 billion in June, according to Treasury Department data. Capital flow figures for July are expected Thursday.
CHAIN STORE SALES UP
Two private sector reports on chain store sales also released on Tuesday showed gains.
Sales at major retailers increased by 3.0 percent on a year-over-year basis for the week ended Sept. 11, up from the preceding week's 2.9 percent pace, said Redbook Research, an independent company.
The International Council of Shopping Centers and UBS said in a joint report chain store sales rose by 0.2 percent in the week ended September 11, compared with flat sales in the previous week. Compared with the same week a year ago, sales increased by 2.7 percent, up from the 2.1 percent pace of the preceding week.
Hmm... I wonder if two Hurricanes in Florida will effect the retail sales?
This is nonsense of course retail sales were down. Two Million people were without power. Florida is the 5th largest ecomony in the Western Hemisphere and the 16th largest in the world.
Wait to see what happens to retail sales in a month or two. It will skyrocket as people pay to repair their homes.
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