WASHINGTON (AFX) - US economic indicators to be released next week will show that the Sept 11 terrorist attacks on New York and Washington triggered a decline in retail sales for the month, economists said. A consensus forecast of Wall Street economists surveyed by AFX News calls for a 0.6 pct fall in September retail sales following a 0.3 pct rise in August.
Economists said they will also be focusing on weekly initial claims for regular state unemployment benefits, which are seen falling, as the worsening job market is having a detrimental effect on consumer spending which accounts for some two-thirds of GDP growth. Asked what the market will be concentrated on this week, Sung Won Sohn, chief US economist at Wells Fargo & Co in Minneapolis, replied:"It will probably be (September) retail sales, to see what extent consumers have decided to cut back and retrench." Sohn is forecasting that retail sales declined 0.7 pct in September.
Michael Moran, chief US economist at Daiwa Securities America in New York, agreed that retail sales will be the key focus of this week's data.
He said the retail sales data will reflect "marked consumer caution after the September 11 attack and rising unemployment as the month moved on".
Economists said the 199,000 decline in September nonfarm payroll employment, reported by the Labour Department Friday, is likely to have a negative impact on consumer spending and sentiment for the month. September nonfarm payroll employment saw its largest drop since Feb 1991, and economists said that retail sales for the month are likely to fall due to the large number of workers being laid off.
There has been a net decline of 488,000 jobs since March, according to Labour Department data, with the airline industry alone announcing 100,000 lay offs since the Sept 11 terrorist attacks.
Forecasts indicate that weekly initial claims for regular state unemployment benefits for the week ended Oct 6 decreased by 32,000 to a seasonally adjusted 496,000 after claims increased 71,000 to 528,000 for the week ended Sept 29.
The significantly higher than expected rise in claims for the week ended Sept 29 lifted the level of claims to its highest point since the week ended July 25, 1992.
Robert McGee, chief US economist at Tokai Bank Ltd in New York said the expected fall in retail spending and continued worsening of the job market is likely to push third quarter GDP growth into negative territory.
"The labour market data which we've got, and for the earlier months before any attacks, already showed the possibility of negative GDP, it's just a question of how negative," McGee said adding that he is forecasting a negative GDP annualized growth rate of 1.0 pct for the third quarter.
Other data due out in the coming week will bring economists up-to-date on recent import prices, producer price inflation and early October consumer sentiment.
Inflationary pressures are expected to remain benign, but economists said th at energy prices could show a rise during September due to higher oil prices for the month.
The bond market and federal government will be closed Monday in observance of the Columbus Day holiday, but the stock market will be open for trading.
Following are the consensus forecasts of Wall Street economists for data to be released this week.
AUGUST WHOLESALE INVENTORIES, Wednesday (10.00 am): Economists expect wholesale inventories to decline 0.3 pct in August after they fell 0.7 pct in July, marking the largest decline in inventories since Sept 1996.
SEPTEMBER IMPORT PRICES, Thursday (8.30 am): Economists forecast that September import prices fell 0.2 pct after declining 0.1 pct in August following a 1.5 pct decrease in July.
WEEKLY JOBLESS CLAIMS, Thursday (8.30 am): Forecasts indicate that weekly initial claims for regular state unemployment benefits for the week ended Oct 6 decreased by 32,000 to a seasonally adjusted 496,000 after claims increased 71,000 to 528,000 for the week ended Sept 29.
SEPTEMBER PRODUCER PRICES INDEX, Friday (8.30 am): Economists say that producer prices rose 0.1 pct in September while the core rate, which excludes food and energy prices, is also expected to rise 0.1 pct.
Headline producer prices rose 0.4 pct while the core rate declined 0.1 pct in August.
The rise in headline PPI in August was the largest since April, while the core rate's decline marked the segment's first drop since February.
SEPTEMBER RETAIL SALES, Friday (8.30 am): Economists expect retail sales to fall 0.6 pct in September after sales rose 0.3 pct in August, marking the smallest gain in the indicator since April.
UNIVERSITY OF MICHIGAN PROVISIONAL OCTOBER CONSUMER SENTIMENT INDEX, Friday (10.00 am): Economists said that the University of Michigan's provisional consumer sentiment index for October will give a reading of 76.0, down from a final 81.8 reading in September.