REPEAT: MNI DATA PREVIEW: Retail Sales Seen +1.9% On Autos,Gas

Repeats Story Initially Transmitted at 19:20 GMT Oct 12/15:20 EST Oct 12

By Sara Haire and Holly Stokes

HIGHLIGHTS:

-Analysts are forecasting a 1.9% gain for retail sales and a 0.9% gain for

retail sales ex-auto for September. 

-Hurricanes Harvey and Irma are the main driver behind the expected gains for

both retail sales and ex-auto.

-Gasoline store receipts and auto sales are expected to spearhead the rise

expected for retail sales. 

-Brick and mortar sales could see a hit due to closures caused by the

hurricanes.

     WASHINGTON (MNI) - Analysts are expecting the hurricanes to have caused

disruption to brick-and-morter sales, but not enough to offset the expected 1.9%

gain for overall retail sales and the 0.9% gain for retail sales ex-auto for

September. 

     The uptick in retail sales is expected to be led by higher gas station

sales, vehicle sales and food sales--typical of a post-hurricane period.

     Analysts are expecting a mixed impact on September retail sales, explaining

that the hurricanes caused business activity to slow down in some industries,

but pick up in others. Amherst Pierpont explains that it is possible that a

disproportionate drop in one geographic region and industry could cause a

sizable drag on retail sales. The respondents from the ISM non-manufacturing

index report indicated that Harvey has disrupted business activity in the oil

and gas industry, with refineries and petrochemical plants being forced to shut

down. 

     Despite forecasting a relatively strong gain of 1.9%, Goldman Sachs claims

retail sales are still posting a lackluster rebound following a

hurricane-related decline in August. In fact, most analysts are expecting a

strong gain, with a range from up 1.4% to up 2.7%, following a decline in

August. 

     After Hurricane Katrina devastated the Gulf Coast region in 2005, headline

retail sales, retail sales and food services, and retail sales ex auto all saw

increases. However, clothing stores and motor vehicle and parts dealers were the

exceptions. 

     Motor vehicle and parts dealers actually saw a 4.4% decline in sales after

Katrina. Despite this historical fact,  analysts claim that autos will see a

rise this time. After Hurricane Katrina, only 200,000 cars were estimated to be

destroyed. After this year's Hurrican Harvey, Houston alone saw 300,000 to

500,000 cars destroyed, according to Cox Automotives. While Hurricane Irma

didn't see as much damage, Cox reports an estimated 200,000 and 400,000 vehicles

were destroyed by the storm. Combined, that would suggested a significantly

larger need for replace vehicles.

     According to manufacturing unit sales data, domestic-made vehicle sales

were seen at 14.2 million in September, up sharply from the 12.3 million seen in

August. Capital Economics predicts that this will translate to a 7% month over

month rebound in nominal vehicle sales, lifting the headline figure. Analysts

from BMO are forecasting headline retail sales to see a 2.6% gain, the fastest

growth in more than 11 years, driven mainly by auto sales and gas station

receipts. 

     Headline and ex-auto retail sales are also expected to lifted by a

price-related gain in gas station sales. Unfortunately for consumers, Texas

being hit so heavily by Hurricane Harvey caused many petroleum plants to shut

down, causing a rise in gas prices. That being said, even without auto sales

included in retail sales, analysts are expecting a 0.9% increase, with gas

stations sales being the main driver. Morgan Stanley predicts gas station sales

will most an increase in excess of 9%. After national gas prices saw an increase

of more than 12% in September due to refinery closures causing a smaller supply,

but a growing demand, analysts like Capital Economics and Barclays anticipate

the value of gas station sales saw a considerable increase.

     Slightly offsetting the expected rise in gas and auto, brick and mortar

sales are expected to take a hit from hurricane driven closures. Analysts are

also discounting chances of a large upswing from Iphone8 sales - with BMO noting

that the phone's sales are significantly lower than its predecessors, likely due

to anticipation of Iphone x. However, there should still be some boost to retail

sales from this release. Also helping recoup brick and mortar's drag, Morgan

Stanley expects internet sales to rebound after an "Amazon prime day payback" in

August.

     Sales at food and beverage stores could prove to have an interesting impact

on retail sales. Analysts at BMO expect grocery store receipts to register a

depressed value due to discounted prices in order to counter Amazon's announced

price cutting at Whole Foods after the recent acquisition.  However, due to

Harvey and Irma, consumers likely cleaned out grocery stores in anticipation of

being unable to access grocery stores easily, making grocers receipts

potentially grow in value. The discounted prices at grocery stores should not

depress September grocery store sales considering grocers had started the

process in August where a 0.3% gain was still seen. After Hurricane Katrina,

there was a 0.8% rise in grocery store sales compared to September of 2006 which

actually posted a decline.   

     Restaurants and beverage services could see depressed sales as a number of

tourist driven cities in Florida and Texas took a substantial hit during Irma,

translating to fewer customers at restaurants in these places. However, a hit to

one geographic region would only partially offset gains in other regions. Even

if one or two industries register declines in retail sales, analysts forecast

that sharp increases in other industries will push retail sales to post a large

gain.

--MNI Washington Bureau; +1 212-800-8517; email: sara.haire@marketnews.com

--MNI Washington Bureau; +1 202-371-2121; email: holly.stokes@marketnews.com