By Timothy R. Homan
Oct. 30 (Bloomberg) -- Spending by U.S. consumers probably fell in September for the first time in five months as auto dealer showrooms emptied in the wake of the government’s auto- rebate program, economists said before a report today.
Purchases decreased 0.5 percent after a 1.3 percent jump in August that was the biggest in almost eight years, according to the median forecast of 75 economists surveyed by Bloomberg News. Other reports may show consumer sentiment dropped this month and business activity shrank at a slower pace.
Today’s spending report may also show Americans’ incomes were little changed last month as payrolls dropped and unemployment climbed. Stagnant wages and waning confidence raise the risk that consumers will retrench in coming months as government assistance programs such as the so-called cash-for- clunkers plan expire.
“Income growth will remain sluggish in the fourth quarter because of job losses,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “The fuel for consumer spending isn’t there.”
The Commerce Department report is due at 8:30 a.m. in Washington. Spending estimates in the Bloomberg survey ranged from a decline of 0.9 percent to a gain of 0.5 percent.
An unchanged reading on incomes would follow gains of 0.2 percent in August and July.
At 10 a.m., Reuters/University of Michigan figures may show the index of consumer sentiment fell to 70 from 73.5 in September, according to the survey median. Estimates ranged from 68 to 74. A preliminary reading earlier this month came in at 69.4.
Monthly Breakdown
Today’s spending report will provide the monthly breakdown of the quarterly figures issued by the Commerce Department yesterday, which may influence the outlook for the next three months. Household purchases, which account for about 70 percent of the economy, rose at a 3.4 percent annual pace in the third quarter, the strongest performance in more than two years, the figures showed.
The world’s largest economy expanded at a 3.5 percent rate from July through September, exceeding the median estimate of economists surveyed.
The report on gross domestic product contributed to the biggest advance in benchmark stock indexes since July. The Standard & Poor’s 500 Index climbed 2.3 percent to close at 1,066.11.
Contract Less
The Institute for Supply Management-Chicago Inc.’s business barometer probably rose to 49 this month from 46.1 in September, according to the survey median. Readings below 50 signal contraction. The report is due at 9:45 a.m. Washington time.
Kellogg Co., the largest U.S. breakfast-cereal maker, yesterday reported third-quarter profit that exceeded analysts’ estimates as costs fell more than sales.
“Consumers remain nervous and are more value conscious than they were a couple of years ago,” Chief Executive Officer David Mackay said in a telephone interview. “We have to be pragmatic about consumers and the issues and pressures they face, and try to help them in any way we can.”
A report from the Labor Department scheduled for release at 8:30 a.m. may show employment expenses in the U.S. rose 0.4 percent in the third quarter, the same as in the previous three months, according to the median estimate of economists surveyed.
Bloomberg Survey
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Pers Pers Chicago U of Mich
Inc Spend PM Conf.
MOM% MOM% Index Index
===============================================================
Date of Release 10/30 10/30 10/30 10/30
Observation Period Sept. Sept. Oct. Oct. F
---------------------------------------------------------------
Median 0.0% -0.5% 49.0 70.0
Average 0.0% -0.5% 49.1 70.0
High Forecast 0.2% 0.5% 52.5 74.0
Low Forecast -0.2% -0.9% 47.0 68.0
Number of Participants 73 75 58 60
Previous 0.2% 1.3% 46.1 73.5
---------------------------------------------------------------
4CAST Ltd. -0.1% -0.4% 52.0 71.0
Action Economics 0.0% -0.5% 48.0 69.4
Aletti Gestielle SGR 0.0% -0.5% 48.0 69.5
Ameriprise Financial Inc 0.1% -0.5% 50.0 70.0
Argus Research Corp. 0.2% 0.1% 47.0 ---
Banesto 0.0% -0.5% 48.5 72.0
Bank of Tokyo- Mitsubishi 0.0% -0.1% 49.8 69.6
Bantleon Bank AG 0.0% -0.6% 50.0 70.5
Barclays Capital 0.0% -0.6% 51.0 70.5
Bayerische Landesbank 0.1% --- 47.5 ---
BBVA 0.2% -0.2% 50.0 73.5
BMO Capital Markets 0.1% -0.6% 48.0 70.0
BNP Paribas 0.1% -0.5% 48.0 70.0
BofA Merrill Lynch Resear -0.1% -0.4% 48.5 70.0
Briefing.com -0.2% -0.7% 51.0 70.3
C I T I C Securities --- --- --- 70.0
Calyon 0.0% -0.3% 48.0 70.0
Capital Economics 0.0% -0.4% 48.0 69.4
CIBC World Markets -0.1% 0.5% --- 68.0
Citi 0.1% -0.4% 49.0 69.0
ClearView Economics 0.1% -0.4% 51.0 74.0
Commerzbank AG 0.1% -0.5% 50.0 69.4
Credit Suisse -0.1% -0.5% 48.0 71.0
Daiwa Securities America -0.1% -0.3% --- ---
Danske Bank -0.1% -0.9% 52.5 69.6
DekaBank 0.0% -0.4% 48.1 70.0
Desjardins Group 0.2% -0.8% 52.0 69.4
Deutsche Bank Securities 0.2% -0.2% 50.0 70.0
Deutsche Postbank AG --- -0.4% --- 70.5
DZ Bank 0.0% -0.5% 47.0 ---
First Trust Advisors 0.0% -0.5% 50.8 70.0
Fortis --- --- 50.0 ---
FTN Financial -0.2% -0.3% 47.5 70.0
Goldman, Sachs & Co. -0.2% -0.3% 52.0 ---
Helaba -0.1% -0.5% 49.0 ---
Herrmann Forecasting 0.1% -0.4% 49.5 70.4
High Frequency Economics 0.1% -0.4% --- ---
HSBC Markets 0.0% -0.5% 50.0 69.5
Ibersecurities 0.2% -0.3% 47.0 70.0
IDEAglobal 0.1% -0.4% 49.0 71.0
IHS Global Insight -0.2% -0.4% --- 69.0
Informa Global Markets 0.0% -0.7% 49.5 69.8
ING Financial Markets 0.1% -0.6% 48.0 71.0
Insight Economics -0.1% -0.8% 50.0 69.0
Intesa-SanPaulo -0.1% -0.4% 50.0 70.0
J.P. Morgan Chase -0.2% -0.7% --- 70.0
Janney Montgomery Scott L 0.0% -0.8% --- ---
Jefferies & Co. 0.2% -0.4% 48.1 70.5
Landesbank Berlin -0.2% -0.2% 48.5 69.5
Landesbank BW 0.2% -0.7% 47.0 70.0
Maria Fiorini Ramirez Inc 0.1% -0.5% --- ---
MFC Global Investment Man 0.0% -0.8% --- ---
Mizuho Securities 0.0% -0.8% 47.0 69.4
Moody’s Economy.com -0.1% -0.4% 48.5 70.5
Morgan Keegan & Co. -0.1% -0.7% --- ---
Morgan Stanley & Co. -0.1% -0.4% --- ---
National Bank Financial --- --- --- 70.0
Natixis 0.1% -0.2% --- ---
Newedge 0.1% -0.4% 48.0 70.5
Nomura Securities Intl. 0.1% -0.1% 48.5 ---
Nord/LB 0.0% -0.1% 49.5 69.0
PNC Bank 0.1% -0.7% --- ---
RBC Capital Markets 0.0% -0.7% --- ---
RBS Securities Inc. 0.0% -0.3% --- 70.0
Ried, Thunberg & Co. --- -0.6% --- 68.0
Schneider Foreign Exchang 0.0% -0.2% --- 70.0
Scotia Capital 0.1% -0.6% --- ---
Societe Generale -0.1% -0.3% 50.0 70.0
Standard Chartered 0.0% -0.6% 48.9 69.7
Stone & McCarthy Research 0.1% -0.7% 47.1 68.9
TD Securities -0.1% -0.4% 50.0 70.0
Thomson Reuters/IFR -0.1% -0.2% 48.5 71.0
UBS 0.0% -0.5% 49.0 72.5
University of Maryland 0.1% -0.6% 48.5 70.2
Wells Fargo & Co. 0.1% -0.5% --- ---
WestLB AG 0.1% -0.6% 48.0 69.4
Westpac Banking Co. 0.0% -0.8% 50.0 69.4
Woodley Park Research 0.1% -0.5% 50.3 69.8
Wrightson Associates --- -0.6% 48.0 68.0
===============================================================
To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
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