Retail sales numbers, jobless claims show uneven recovery
Thursday, October 7, 2010; 11:05 PM
The nation's economic recovery remained halting and uneven in September as momentum stalled in consumer spending and the labor market showed mixed signs of progress.
Retailers on Thursday released monthly sales results that showed sharp improvement at high-end stores but only tepid growth among mass discounters. Although industry sales rose overall, the pace of growth has slowed since the summer.
Meanwhile, the Labor Department said the number of new claims for unemployment insurance benefits fell to 445,000 last week, the lowest level since early July and down 11,000 from the previous week. Yet the government's official tally of the labor market, slated for release Friday, is expected to show that the unemployment rate inched upward in September to 9.7 percent. And the stubborn job market is weighing on consumers.
"It may be true in an economic sense, in an academic sense, that the recession is over," said Matt Shay, chief executive of the National Retail Federation, an industry trade group. But "in the mind of many consumers, the recession is not over."
The International Council of Shopping Centers, a trade group, reported Thursday that sales at stores open at least a year - a key measure of retail health - rose 2.6 percent in September compared with a year ago. Though analysts called the gain modest, it was less than the 3 percent jumps over the summer and was the smallest increase since May.
The figure is based on sales data at about 30 national chain stores that reported results and was driven by strong performance among high-end retailers. Nordstrom posted a 7.5 percent gain in September compared with a year ago, while Saks Fifth Avenue's sales grew 6.5 percent. Overall, the sector rose 6.6 percent, the most of any group.
Department stores also reported strong results, boosted in part by last-minute back-to-school shopping. Macy's said its September sales jumped 4.8 percent, calling the back-to-school season its strongest in years.
"We believe this momentum will work to our benefit as we approach the upcoming holiday season," Macy's chief executive Terry J. Lundgren said in a statement.
But not all retailers were as merry as Macy's. Sales at discount stores inched up 1.2 percent in September, a sign that lower-income consumers still remain distressed. Target said its 1.3 percent gain was at the low end of its expectations. And though behemoth retailer Wal-Mart does not report monthly results, it has said the "paycheck cycle" - in which sales spike when shoppers receive their paychecks or government benefits - remains pronounced.
In the job market, the continued decline in weekly unemployment claims is positive news, representing a downward trend in the number of Americans on the jobless rolls. That number peaked at more than 500,000 in August before falling to 445,000 last week.
The four-week moving average of claims, which smooths out volatility, fell to 456,000 from 459,000. The number of continuing claims for benefits actually edged up by 5,000.
But the September employment report to be released Friday should offer more definitive evidence of where things stand in the labor market. With the Census Bureau still eliminating temporary jobs from its once-a-decade count, overall job growth is expected to be approximately zero. Growth in private-sector jobs, however, is expected to edge up, with 75,000 net new positions an improvement from the 67,000 private jobs created in August.
However, with overall job creation at a standstill and people returning to the labor force as the economy improves, forecasters expect the unemployment rate to rise from 9.6 percent to 9.7 percent anyway.
The report has greater implications than normal for government policy. It is both the last employment report before the midterm elections and the last one before the Federal Reserve meets in early November to decide whether to take new measures to try to boost economic growth.
Retail sales are also closely watched for signs of where the economy might be headed. Consumer spending accounts for roughly 70 percent of the gross domestic product, and the shopping bonanza of the holiday season is critical to the nation's health.
A survey released Thursday by consumer behavior research firm NPD Group found that shoppers are essentially in a holding pattern from 2009. About 61 percent of consumers say they plan to spend the same as last year, up from 59 percent in 2009. The percentage of shoppers who say they will spend more has dropped from 11 percent to 9 percent.
"Even though the recession is technically over, lingering concerns are keeping consumers in a cautious frame of mind," said Marshal Cohen, NPD's chief industry analyst. "We are seeing what I call 'calculated consumption.' I believe that it is a consumer mind-set that will be around after holiday shopping is over."