(MENAFN- Khaleej Times) Retail sales probably rose at a faster pace in June and the US housing market strengthened as the economy began to emerge from a slowdown tied to higher taxes and budget cutbacks, economists said before reports this week.
Purchases at retailers rose 0.8 per cent, the most in four months, after a 0.6 per cent advance in May, according to the median forecast of economists surveyed by Bloomberg before Monday's Commerce Department release. Other data may show builders broke ground on more homes, housing permits climbed and inflation was limited.
Americans bought cars and trucks last month at the fastest pace since 2007, a sign consumers have the wherewithal to keep spending as household wealth and the labor market improve. Other data this week are projected to show industrial production rebounded in June and an index of leading indicators picked up, setting the stage for stronger second-half growth.
"The transition from a soft patch to a more sustained rebound is slowly beginning to take shape," said Millan Mulraine, director of US rates research at TD Securities USA in New York. "The underlying tone of retail sales is encouraging. The positive momentum in housing will continue. Manufacturing has stabilised." Federal Reserve Chairman Ben S. Bernanke this week in two days of testimony to Congress may shed more light on the central bank's view of the economy and how policy makers may begin scaling back $85 billion in monthly bond purchases.
Retail sales last month got a boost from demand for automobiles. Cars and light trucks sold in June at a 15.89 million annual rate, the fastest since November 2007, according to data from Ward's Automotive Group. The need to replace aging vehicles, along with attractive financing offers and steady hiring will keep fueling industry sales. Household wealth has been boosted by a rally in the stock market and higher property values. Home prices in the 12 months ended in April rose by the most in more than seven years, according to the S&P/Case-Shiller index of property values. The Standard & Poor's 500 Index last week reached a record high.
"Economic indicators continue to improve," Lin said on a July 2 sales call. The "consumer spending growth pace is slowly picking up."
A Labour Department report the next day may show the consumer price index, excluding volatile food and energy costs, climbed 1.6 per cent in the 12 months to June, the smallest gain in two years, according to the Bloomberg survey median. The overall cost of living climbed 1.7 per cent from a year earlier and 0.3 per cent from the prior month, economists forecast.
Factories also are starting to stabilise. Industrial production advanced 0.3 per cent in June after stagnating in May, the Bloomberg survey showed ahead of Fed data to be released on July 16.
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