Retail Sales and Producer Price Reports Show Slower U.S. Growth


Reports on retail sales and producer prices showed U.S. economic growth is cooling after its third- quarter spurt, while inflation slows.

Americans skimped on furniture and sporting goods in October to offset higher energy costs, leading Lehman Brothers Holdings Inc. to anticipate ``one of the weakest'' holiday shopping periods in years. Meanwhile, a less-than-forecast 0.1 percent increase in wholesale prices reinforced traders' expectations that the Federal Reserve will be forced to reduce interest rates again next month.

The 0.2 percent retail-sales increase followed a revised 0.7 percent gain the previous month, the Commerce Department said today in Washington. The median forecast of economists surveyed by Bloomberg News was for a 0.1 percent rise. Producer- price gains retreated from a 1.1 percent rise in September.

The increase in sales was boosted by a 0.8 percent jump in purchases at service stations that probably reflected higher gasoline prices. Excluding gas, retail sales were up 0.1 percent, the smallest advance in four months.

Sales at furniture stores dropped 0.9 percent last month after falling 1.3 percent in September. Purchases of sporting goods fell 0.4 percent and sales at department stores decreased 0.5 percent. Non-store retailers, such as internet merchants, saw a 1 percent decline in demand. Auto dealers, grocery stores, restaurants and building- material merchants were among those that saw an increase in sales.

Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product figures for consumer spending, sales rose 0.1 percent, following a 0.2 percent increase the month before. The government uses data from other sources to calculate the contribution from the three categories excluded.

The Fed currently views the risks of higher inflation and slower growth as equally balanced after it lowered the rate target twice in as many months, Chairman Ben S. Bernanke said Nov. 8 in testimony to Congress.


TradingEconomics.com, Bloomberg
11/14/2007 2:20:43 PM