Job worries fail to keep Americans away from malls
Friday 08 October 2010
US consumers hit the shops last month, spending more than expected and raising hopes that the world's largest economy can pull itself out of its funk.
Mall stalwarts from American Eagle Outfitters to Victoria's Secret reported better-than-forecast September sales yesterday, with department stores and upmarket retailers such as Neiman Marcus also coming in ahead of Wall Street expectations.
The brighter news sent shares up across the sector, and also lifted investors' nerves ahead of today's crucial read-out on September unemployment. Joblessness in the US remains close to 10 per cent, with under-employment – the number of people working fewer hours than they would wish – even higher. Economists have warned that demand will remain sluggish while those numbers stay high.
Yesterday's strong retail reports, though, suggest that consumers are not so burdened by job woes that they are holding back consumption. Although the back-to-school season started late, Thomson Reuters said that a basket of 28 retailers reported a 2.8 per cent rise in like-for-like sales last month, beating forecasts of a 2.1 per cent gain.
Among the standout performers, Victoria's Secret, the lingerie seller owned by Limited Brands, posted a 13 per cent increase, Macy's, the famous department store chain, recorded a 4.8 per cent rise against expectations of just 3.3 per cent, and Abercrombie & Fitch, teen clothier, declared a gain of 13 per cent. American Eagle, the clothing chain, saw sales rise 4 per cent for the five weeks to 2 October.
Not every retailer had a good month. Gap, the jeans and khakis chain, lost 2 per cent of its sales from September 2009, and Target, the general merchandise chain, missed Wall Street forecasts, too.
Many businesses have cited uncertainty about the strength of underlying demand for their decision not to hire new workers in great numbers, and economists are expecting the unemployment rate for September to remain at 9.6 per cent, or to tick higher. The US economy is forecast to have shed 8,000 jobs last month, with private-sector employers adding 85,000 to payrolls, up from 67,000 in August. New unemployment claims in the past week, reported yesterday at 445,000, was the lowest figure since early July.
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