PREVIEW-U.S. retail sales seen +1.2 pct in March on autos

WHAT: U.S. March retail sales report

WHEN: Wednesday, April 14 at 8:30 a.m. (1230 GMT)

REUTERS FORECASTS:

* Retail sales +1.2 pct m/m after February’s surprise 0.3
percent gain. Forecasts range from +0.5 pct to +3.0 pct.

* Sales excluding autos +0.5 pct vs +0.8 pct in Feb.
Forecasts range from flat to +2.5 pct.

FACTORS TO WATCH:

Retail sales have been resilient despite high unemployment
and the paring down of debt by households. The brightening
economic picture, particularly a nascent labor market recovery,
is encouraging consumers to dip into their savings to fund
purchases of goods such as cars and hobby-related items.

Economists at Moody’s Economy.com say first quarter
consumption is shaping up to be the strongest since early 2007
and a rise in sales would add to evidence the manufacturing-led
recovery is broadening out.

Retail sales will benefit from a 13.5 percent jump in auto
sales to a seven-month high last month, as automakers offered
discounts. Even excluding that, top U.S. retail chains reported
a record rise in monthly same-store sales for March, supported
by an early Easter holiday and warm weather.

Electronic and appliance sales are seen boosted by the
“cash for appliances” program, a part of post-crisis government
stimulus which gives rebates for purchases of new
energy-efficient appliances. Warm weather also likely lifted
sales of building materials and gardening equipment, while a
rise in gasoline prices saw increased receipts at gasoline
stations.

Core retail sales — which exclude autos, gasoline and
building materials — are expected to have added to February’s
0.9 percent increase. Core sales correspond most closely with
the consumer spending component of the government’s gross
domestic product report. Economists at IHS Global Insight
estimate real consumer spending increased at a 3.1 percent
annual rate in the first quarter, almost double the 1.6 percent
pace in the last three months of 2009.

MARKET IMPACT

Further signs of improvement in consumer spending, a key
driver of corporate profits, should help U.S. stocks (Read more about the stock market today. ).

The benchmark S&P 500 is close to its highest level in 19
months, up 77 percent since hitting bottom in early March 2009.
At current levels, however, it would have to overcome
resistance in the 1,200-1,220 area before heading much higher.

Yields on U.S. government debt may jump if sales ex-autos
post another strong gain as this will stoke speculation that
the Federal Reserve will raise interest rates sooner this year
than economists have been predicting.

The 10-year yield could make another run toward 4 percent,
a level briefly touched a week ago.

A dip below expectations on the other hand should soothe
worries of a rate hike any time earlier than the fourth quarter
and could prompt the 10-year yield to test 3.75-2.80 percent.

A report would also bolster the view the U.S. economy is
outperforming Europe and Japan, helping the dollar. Key levels
to watch for euro/dollar are $1.3860 and $1.4026 on the upside,
while support is around 1.3493.

(Polling by Bangalore unit)
(Reporting by Lucia Mutikani, Wanfeng Zhou, Ellis Mnyandu and
Richard Leong; editing by Patrick Graham)

PREVIEW-U.S. retail sales seen +1.2 pct in March on autos