By Kevin Kastner

WASHINGTON, December 14 (MNI) – Retail sales rose sharply in
November, their fifth straight gain. This month, however, they rise
without the help of the auto sector, which posted a decline in November.
However, sales at gasoline stations and for holiday merchandise more
than offset the motor vehicle drop, keeping the outlook for fourth
quarter consumption very positive. Business inventories posted a solid
October gain, though retail inventories fell, offsetting the already
announced factory and wholesale gains.

Producer prices posted a solid increase in November, though food
and energy prices accounted for much of the gain, leaving core prices up
slightly after their October plunge. While there were also signs of
pressures in the inflation pipeline to go along with the finished goods
price gains, the lack of pricing power should keep those costs from
passing onto consumers for the near future.

The international trade gap narrowed in December, as exports surged
and imports declined. The October deficit was smaller than most analysts
had expected and could result in adjustments to GDP estimated for the
fourth quarter.

The Michigan sentiment index rose sharply in early-December, with
gains in both the current conditions and expectations measures. The data
suggest that consumers were a bit more optimistic, which could translate
into better holiday sales.

The level of initial jobless claims fell back in the December 4
week, keeping claims on their recent downward trend. The surge in
unadjusted claims in the post-holiday week was smaller than seasonal
adjustment factors had expected. The week after Thanksgiving is usually
the largest one-week gain of the year due to the usual post-holiday
rebound and also to layoffs in seasonal industries such as construction.
The pattern should also be seen in the first few weeks of January when
holiday workers are laid off.

—
Business Inventories for October (percent change)
Tuesday, December 14 at 10:00 a.m. ET Actual:
Median Range Responses Oct10 Sep10 Aug10
Inventories +1.0% +0.7% to +1.2% 16 +0.7% +1.3% +0.9%

Comments: October business inventories rose 0.7%, below
expectations of a 1.0% rise because retail inventories fell 0.6% on
strong sales. Retail inventories excluding motor vehicle fell 0.3%, with
motor vehicle inventories down 1.3%. Business inventories excluding
retail auto inventories rose 0.9%. There were inventory declines in
every retail category except clothing and department stores. Business
sales were up 1.4% in October, pulling the inventory/sales ratio down to
1.27, still below the 1.30 ratio a year ago.

—
Retail and Food Sales for November (percent change)
Tuesday, December 14 at 8:30 a.m. ET Actual:
Median Range Responses Nov10 Oct10 Sep10
Retail Sales +0.6% +0.3% to +0.9% 21 +0.8% +1.7% +0.9%
Ex-Mtr Veh +0.7% +0.4% to +1.1% 21 +1.2% +0.8% +0.8%

Comments: Retail sales rose 0.8% in November despite a 0.8% decline
in motor vehicle and parts sales, as sales excluding motor vehicle were
up a solid 1.2%. There were strong sales increases in a variety of
components, particularly gasoline station sales and at holiday sales
stores such as department stores, clothing stores, and sporting goods
stores. Overall, sales were well above their year ago levels for almost
all of the components, with particular gains in recent months that
should boost 4Q PCE.

—
Producer Price Index for November (percent change)
Tuesday, December 14 at 8:30 a.m. ET Actual:
Median Range Responses Nov10 Oct10 Sep10
PPI +0.7% +0.3% to +1.2% 21 +0.8% +0.4% +0.4%
PPI Core +0.3% -0.1% to +0.8% 21 +0.3% -0.6% +0.1%

Comments: Producer prices jumped 0.8% in November on a 1.0% rise in
food prices and a 2.1% rise in energy prices. Core PPI was up 0.3% on a
1.7% increase in passenger car prices and gains in other key core
components. There also increases at both the intermediate and crude
levels, both including and excluding food and energy prices. The pace of
year/year inflation remains tame, particularly for the core, and with
pricing power weak, there should be little pass through to consumers.

—
Treasury Statement for November ($ billions)
Friday, December 10 at 2:00 p.m. ET Actual:
Median Range Responses Nov10 Oct10 Nov09
Balance -$130.0b -$145.0b to -$110.0b 10 -$150.4b -$140.4b -$120.3b

Comments: The U.S. Treasury posted a $150.4 billion budget gap in
November, well above the $120.3 billion gap in November 2009, but the
2009 figure was affected by a shift in outlays into the previous month.
Through the first two months of the fiscal year, the shortfall stands at
$290.8 billion, only slightly smaller than the $296.7 billion gap in the
same period a year earlier.

—
Reuters/University of Michigan Survey for December (preliminary)
Friday, December 10 at 9:55 a.m. ET Actual:
Median Range Responses Dec10p Nov10 Oct10
Consumer Sent 72.2 71.0 to 76.5 17 74.2 71.6 67.7

Comments: The Michigan Sentiment index jumped to a reading of 74.2
in early-December from 71.6 in November, with the current conditions
index and expectations reading both higher and inflation expectations
down.

—
Trade in Goods and Services for October (deficit, billion $)
Friday, December 10 at 8:30 a.m. ET Actual:
Median Range Responses Oct10 Sep10 Aug10
Trade Gap -$44.0b -$45.5b to -$40.0b 19 -$38.7b -$44.6b -$46.9b

Comments: The international trade gap narrowed more than expected
to $38.7 billion in October on a surge in exports and lower imports. The
export gain was led by industrial supplies, particularly energy
components. There were also stronger exports of capital goods, food,
automotive, and consumer goods, though civilian aircraft exports
declined. Imports fell due to a decline in the value of energy goods,
as well as lower capital goods, food, and automotive imports. Consumer
goods imports, however, surged prior to the holiday season. The trade
gap with China was smaller, but there were wider deficits with Canada,
the EU, and Japan. The trade data should result in stronger 4Q GDP
estimates.

—
Weekly Jobless Claims for week of December 4
Thursday, December 9 at 8:30 a.m. ET Actual:
Median Range Responses 04-Dec 27-Nov 20-Nov
Jobless claims 425k 370k to 435k 17 421k 438k 410k

Comments: Initial jobless claims fell 17,000 to 421,000 in December
4 week, slightly below the 425,000 level expected. The Labor Department
analyst said seasonal factors expected a 46.9% rise, or about 194,000,
in unadjusted claims in what is usually the largest weekly jump of the
year due to holiday effects and seasonal layoffs in construction and
other industries. Actually, unadjusted claims rose only 40.9%, or
169,085, to 582,007. With the decrease in seasonally adjusted claims,
the 4-week moving average fell 4,000 to 427,500, continuing its downward
trend. Continuing claims fell 191,000 to 4.086 million in November 27
holiday week, the lowest level since the November 15, 2008 week. The
insured unemployment rate fell to 3.2%, the lowest since the November
22, 2008 week.

—
Consumer Credit for October (dollar change, billions)
Tuesday, December 7 at 3:00 p.m. ET Actual:
Median Range Responses Oct10 Sep10 Aug10
Cons Credit -$2.0b -$5.0b to +$1.5b 15 +$3.4b +$1.2b -$5.0b

Comments: Consumer credit usage rose $3.4 billion in October,
though revolving credit use continued its downward trend with a $5.6
billion decline. Nonrevolving credit use jumped $9.0 billion in the
month on strong auto sales. Nonrevolving credit usage has risen over $19
million in the last three months combined.

** Market News International Washington Bureau (202) 371-2121 **

[TOPICS: MAUDS$]