Washington, April 12 (Bloomberg) -- Retailers' sales probably showed little change inMarch, a sign U.S. economic growth remains sluggish, analysts said in advance of agovernment report set for release today. Retail sales probably rose 0.1 percent in March to $277 billion after falling 0.2 percentin February, according to the median of 44 forecasts in a Bloomberg News survey.Not including automobiles, sales probably rose 0.2 percent last month after dropping0.3 percent. ``I suspect it's going to be slow for the year,'' said Michael Moran, chief economist atDaiwa Securities America Inc. in New York. ``We're seeing a pick-up in layoffs, andgiven the way the stock market has behaved, I don't think we're going to see a quickbounce back in consumer spending.'' The slowdown in growth, however, has helped to keep inflation in check. Stableenergy prices probably limited the increase in the government's producer price indexto 0.1 percent in March, according to a Bloomberg News survey. That follows a 0.1percent rise in February. The core PPI, which excludes food and energy costs,probably also rose 0.1 percent in March after a 0.3 percent drop a month earlier. The Commerce Department will issue the retail sales report at 8:30 a.m. Washingtontime. The Labor Department will release the inflation report at the same time alongwith a report that's expected to show first-time claims for jobless benefits held closeto a 2 1/2-year high. Applications for unemployment probably fell by 3,000 to 380,000last week, analysts said.
Consumers Face Hurdles
Consumers faced several hurdles in March. The unemployment rate rose to 4.3percent, the highest in 1 1/2 years. Stock prices plummeted, as the Dow JonesIndustrial Average ended the month 16 percent below its January 2000 peak -- closeto the 20 percent decline that conventionally defines a bear market. To keep the economy from stalling or worse, Federal Reserve policy makers onMarch 20 lowered interest rates for the third time since the start of the year andsignaled a willingness to reduce rates further if necessary to revive growth. Theovernight bank-lending rate is 5 percent, the lowest since August 1999. One reason retail sales probably didn't increase more than 0.1 percent last monthwas that auto sales dropped to 17.1 million vehicles at an annual pace, the fewest sofar this year. At the same time, a Bank of Tokyo-Mitsubishi survey found that same-store sales at 84 U.S. retailers declined every week in March. And gasoline pricesdropped to $1.44 a gallon, the lowest since February 2000. ``You've got a lot of negatives parading for this month,'' Moran said. Even so, consumers had some reasons to keep spending. U.S. tax refunds werehigher in the first three months of 2001 than a year ago, as the average refund rose to$1,751 from $1,668. And falling mortgage rates have led to a surge in refinancingactivity. The Mortgage Bankers Association's refinancing index reached a 2 1/2 year high inMarch, as homeowners took advantage of mortgage rates below 7 percent. What'smore, consumers stayed upbeat about the future in March. The Conference Board'sconsumer confidence index rose to 117 in March, the first increase since September,as optimism increased about the outlook for jobs and because of a rise plans to buyhomes and appliances.
Inflation Outlook
Tame inflation also helps. ``Despite some pockets of strength, inflation isn't aconcern for the Federal Reserve at this point,'' said Rick MacDonald, an economist atStandard & Poor's MMS in Belmont, California. Fed policy makers have said much the same. ``The focus right now is on economicgrowth rather than inflation,'' said Fed Bank of Dallas President Robert McTeer lastweek. ``Right now the priority is on avoiding a worse slowdown than we already haveand getting the recovery going.'' Energy prices are about the same or lower than they were earlier this year, thoughthey remain higher then they were a year ago and that is putting pressure oncorporate earnings. Crude oil futures prices on the New York Mercantile Exchangewere 14 percent lower at the end of March than in early February. March crudefutures were 14 percent higher than in March 2000. Natural gas futures prices weredown 13 percent at the end of March from their January peak. Over the past year,gas prices are almost 90 percent higher. Interstate Bakeries Corp., the maker of Hostess Twinkies and Wonder Bread, lastweek said fiscal third-quarter profit fell 62 percent because of higher fuel costs. Thehigher energy costs will continue to hurt earnings in the fourth quarter, the companysaid. ``We're getting hit on natural gas to run our ovens, on electricity at ouroperations and our stores, and on gasoline and diesel,'' said Frank Coffey, chieffinancial officer. Still, an industry survey last week found manufacturers paid lower prices in March forthe first time in almost two years. The National Association of PurchasingManagement's prices paid index fell to 49.9 last month, the lowest since April 1999.Readings below 50 signal prices are declining.