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Posts Tagged ‘retailers’

A just released report by the Commerce Department shows that retail sales unexpectedly dropped by 0.4% in April, following a revised drop of 1.3% in March and analysts contributed the drop to the biggest loss of household wealth on record, falling home values and rising unemployment.

Most economists had predicted that retail sales would rise by 0.2% after a 1% decrease a month earlier.

Bill Cheney, who is the chief economist at John Hancock Financial Services Inc. said in an interview that, “The second quarter is going to be tough. Consumers are losing their jobs, concerned about losing their jobs and losing wealth”.

Mike Niemira who is the chief economist at ICSC was a little bit less downbeat and said, “We’re still working our way through the slowdown. I think it will get better as the year progresses. The month of May will still be tough and I suspect by the summer that things will be a little broader in terms of the improvement”.

The decline in sales was led by falling demand at furniture, clothing, grocery and electronics’ stores, and even as fuel prices rose, receipts at service stations fell, indicating perhaps that Americans were driving less.

Clothing sales fell by 0.5% and sales at general-merchandise stores fell by 0.1%.

Auto sales unexpectedly gained by 0.2% after dropping by 2% in March, with automobiles selling at a 9.3 million annual pace in April, compared with a 9.9 million rate in March.

Chrysler, whose U.S. whose sales were down by 48% from the same month last year, started offering rebates of up to $6,000 on May 6 and the offers will continue until the end of the month.

The Labor Department reported last week that payrolls fell by 539,000 workers last month making it the smallest drop since October, but it took the unemployment rate to 8.9%, which is the highest level since 1983 and economists expect it to average 9.6% in 2010.

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‘Commerce Department’ figures, that are due out on March 12th are expected to show that automobile sales in the U.S. fell in February to their lowest level since 1981, and that that sales of GM cars plunged by 53% and Ford Motor Company’s by 48%.

It is likely that sales at most U.S. retailers also fell in February for the seventh time in eight months, as more and more consumers appeared to be shopping at discount stores.

Wal-Mart, which is the world’s largest retailer announced last week that sales at stores that had been open for at least one year had increased by 5.1%.

Furthermore, a Labor Department report last week revealed that employers had eliminated 651,000 jobs in February and that the unemployment rate had jumped to 8.1% which would make it the highest level since December 1983.

Job losses have now exceeded 600,000 for each of three consecutive months, and the last time that that is known to have happened was in 1939 when record keeping first began.

Jonathan Basile, who is an economist at Credit Suisse Holdings in New York had this to say, “The headwinds are coming from everywhere. Persistent job losses and reports of pay cuts have become embedded in consumer expectations and they think that incomes are going to shrink”.

The intention of the Obama administration’s $787 billion stimulus plan is to create, or in some way protect around 3.5 million jobs, but the economy has already lost 4.4 million since the recession began in December 2007

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