US data hit Bush's hopes
Retail sales, consumer confidence, inflation - all lower than forecast
David Teather in New York
Saturday September 13, 2003
The Guardian
The United States economy stumbled again yesterday with the release of
crucial retail sales, consumer confidence and inflation data that were
uniformly worse than analysts had been expecting.
According to the US commerce department, retail sales rose by 0.6% in
August, well below Wall Street forecasts of 1.4%. In July, retail
sales grew at a far brisker rate of 1.3%.
The figures will be a blow to the White House - consumer spending
accounts for two-thirds of US economic activity and the Bush
administration hoped that tax cuts and rebate cheques arriving in the
post would give the limping economy the boost it needed.
Consumer sentiment dipped in early September as the nascent recovery
continued to fail in creating jobs.
A separate report on US wholesale prices, an indicator of inflation,
showed an increase of 0.4% last month, higher than most analysts had
hoped for; the growth, however, was largely due to volatile food and
energy prices.
The reports combined to weigh on Wall Street in early trading. The Dow
Jones index of leading shares fell by as much as 70 points shortly
after the open of trading but rallied in the late morning. It was 50
points lower at 9,408 approaching noon.
The data, suggesting that the US economy had still not begun a
sustained recovery, pushed the dollar lower against the euro. The
euro, already trading at a four-week high, was up by a further 0.4% in
early trade on Friday at $1.1253. Sterling hit a month high against
the dollar, climbing half a percentage point to $1.6035.
Some analysts, however, said the negative reaction had been overdone.
"Six tenths of a per centage point is good healthy rate of increase,
no matter how you look at it," said Doug Lee, of consulting firm
Economics.
Sentiment was not helped by Oracle, the world's second largest
software firm, which reported disappointing sales. Oracle reported a
28% leap in first-quarter profits to $342.7m, but the improvement was
largely due to cost cutting. Revenues were just 2% higher and sales of
new software licences, a closely watched measure of business momentum,
actually fell by 7%.
Shares in the company were trading 5.6% lower, at $12.25.
The economic data will be closely examined by US Federal Reserve
policymakers, who meet next Tuesday to review interest rates.
There have been increasing doubts about the sustainability of the
economic recovery in the US as recent employment data have shown a
lack of new jobs being created. A weak labour market could put further
pressure on confidence and spending.
The closely observed University of Michigan's consumer sentiment index
showed a drop to 88.2 from 89.3 in August, defying expectations for a
rise to 90.
Excluding sales of motor vehicles and parts, demand for retail goods
rose 0.7% last month. Car dealerships saw sales rise 0.5% after
soaring 2.4% in July.
Car sales have been sustained by large incentives and discounting,
introduced in the wake of the terrorist attacks on the US two years
ago as a means of kickstarting sales.
Analysts have regularly argued that demand will eventually run out of
steam, leaving the car industry with falling sales while being saddled
with margin-eating incentives.
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| User: "WH" |
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| Title: Re: US data hit Bush's hopes |
13 Sep 2003 09:26:18 AM |
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<DaarkSyde@home.com> skrev i meddelandet
news:9tv5mv8qsvb6amurmhh8gpmac80a23npn5@4ax.com...
US data hit Bush's hopes
Retail sales, consumer confidence, inflation - all lower than forecast
David Teather in New York
Saturday September 13, 2003
The Guardian
The United States economy stumbled again yesterday with the release of
crucial retail sales, consumer confidence and inflation data that were
uniformly worse than analysts had been expecting.
According to the US commerce department, retail sales rose by 0.6% in
August, well below Wall Street forecasts of 1.4%. In July, retail
sales grew at a far brisker rate of 1.3%.
Must be too much free stuff on the net. Ask Tony and Loida about it :)
WH
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