May US Retail Sales Dip Below Expectations



By: ORIT ALON  
Published: June 11th 2010
in Economics » World

Toronto Stock Exchange
Pic: wikimedia commons

The updated figures published today on an unexpected fall in U.S. retail sales in May sparked fears in the markets that economic recovery may be stalling. The Toronto stock market was off to a sluggish start Friday after U.S. retail sales for May were off from expectations, raising fresh concern about the strength of an American economic upswing.

 

The S&P/TSX composite index decreased 22.39 points to 11,613.46 after the U.S. Commerce Department reported that sales were lower than expected at 1.2 per cent — the largest amount in eight months — against an outlook for a gain of 0.2 per cent. Excluding cars, retail sales decreased 1.1 per cent, worse than the 0.1 per cent increase that was predicted. The data is important because U.S. consumer spending accounts for three quarters of the US economy and a fifth of the global market.

 

The Canadian dollar was off 0.49 of a cent to 96.48 cents US while the TSX Venture Exchange added 1.15 points to 1,453.87. Statistics Canada reported the domestic industrial sector continues to recuperate. The bureau said Canadian industries operated at 74.2 per cent of their production ability in the first quarter of 2010, an increase from 71.3 per cent in the fourth quarter of 2009 and their third straight quarterly uptick. But it's still well below the 83.1 per cent of the first quarter of 2007, after which the downward spiral began.

 

The Toronto market felt pressure from the energy sector, down one per cent as the July crude contract on the New York Mercantile Exchange shed $1.48 to US$74 a barrel. The decrease followed three days of positive gains on hopes for higher demand after data showed decreased crude inventories in the U.S.

 

The lower start to the session comes after markets surged Thursday following a report from the Chinese government which showed that exports rose a better than expected 48.5 per cent in May, while imports jumped 48.3 per cent. The news was predominantly welcome to investors who had grown anxious that China would unintentionally slow growth too much in an attempt to avoid its markets overheating, thus hurting the global rebound. It also shifted investors’ focal points from the European debt crisis and the TSX ended Thursday's session with a 185-point gain. Other economic data showing lower jobless insurance claims helped send the Dow industrials surge up 273 points.



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