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Sales at U.S. retailers probably rose in November for the third time in the past four months, a sign consumer spending will sustain growth into 2010, economists said before a government report this week.

Purchases climbed 0.7 percent after a 1.4 percent gain the prior month, according to the median estimate of 62 economists surveyed by Bloomberg News before Commerce Department figures on Dec. 11. Other reports may show the trade gap widened in October and consumers grew more confident this month.

Gains in sales show American households have survived the worst employment slump in the postwar era and are poised to join in the emerging expansion. Treasury Secretary Timothy Geithner said the labor market is moving closer to a period of job creation instead of losses, which may give the economy an additional lift early next year.

“Job gains are in sight,” said Ken Mayland, president ClearView Economics LLC in Pepper Pike, Ohio. “With employment increases, we can expect people to begin buying some more homes, cars, appliances, etc.”

A Labor Department report last week showed the economy lost 11,000 jobs in November, the smallest decline since the start of the recession in December 2007. The jobless rate unexpectedly fell to 10 percent from 10.2 percent.

The report showed “progress, but not good enough,” Geithner said in a Dec. 4 interview for Bloomberg Television’s “Political Capital With Al Hunt.”

Geithner on Economy

“The key test is when you see companies across the country starting to create jobs and add to payrolls,” Geithner said. “We’re getting closer to that point — that’s the important thing. The economy is now growing and growth seems to be gradually strengthening.”

Auto sales are improving even after the federal “cash- for-clunkers” incentives ended in late August.

General Motors Co., Toyota Motor Corp., Ford Motor Co. and Chrysler Group LLC all posted November sales that beat analysts’ estimates. The seasonally adjusted sales rate was 10.9 million vehicles, up from 10.45 million in October, according to industry figures released last week.

Excluding automobiles, retail sales probably rose 0.4 percent after a 0.2 percent increase the prior month, according to the Bloomberg survey. A gain would be the fourth straight.

Holiday shoppers are turning out. Sales on Black Friday and the weekend after Thanksgiving advanced 0.5 percent as discounts on electronics and toys drew budget-conscious crowds, according to the National Retail Federation.

Electronics Sales

Best Buy Co., the biggest electronics chain, had bigger early-morning crowds than last year, said Brian Dunn, chief executive officer and president of the Eden Prairie, Minnesota- based company. He said shoppers would continue to see discounted pricing into the year-end holidays.

“You’re going to see great values throughout the holiday selling season,” he said in an interview with Bloomberg Television on Nov. 27.

TJX Corporation Inc. reported sales up 15 percent in the four weeks ended Nov. 28 from a year earlier. The operator of T.J. Maxx and other low-priced apparel retailers forecasts strong sales through the end of the year.

“We are confident in our momentum,” said Carol Meyrowitz, chief executive officer of TJX, said in a statement on Dec. 3.

Gaining Confidence

The Reuters/University of Michigan preliminary index of consumer sentiment for December probably rose to 69 from 67.4 a month earlier, according to the Bloomberg survey before the Dec. 11 release.

The economy grew at a 2.8 percent annual pace in the third quarter following four quarters of contraction that marked the deepest recession since the 1930s. Economists surveyed by Bloomberg early last month forecast growth will accelerate to 3 percent in the current quarter.

The recovery is spurring demand for imports. That probably caused the trade deficit to widen to $37 billion in October from $36.5 billion in September, according to the median estimate of economists surveyed by Bloomberg before the Dec. 10 report from the Commerce Department. The collapse in trade earlier this year brought the deficit down to a near-decade low of $26.4 billion in May.

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Faced with shrinking market shares, fragmenting audiences, disappearing brick-and-mortar recorded music retailers and a continued double-digit decline in compact disc sales, Canadian independent record labels that exclusively sold and distributed CDs until a few years ago are acting as agents and booking concert tours for their artists.

They have formed in-house management companies, and bought ticket agencies and digital download retailers.

"The entire music industry is changing, and nobody knows what it’s changing into, so everyone’s trying to create new strategies that work for them," says Lloyd Nishimura, president of Toronto’s Outside Music, whose company has expanded into artist management with a roster that includes sibling songwriters Matthew and Jill Barber and the Hylozoists.

"I don’t think it’s that much of a stretch if you’re a management company to have in-house booking or other music-related businesses. Everybody will be looking at a whole bunch of opportunities in the future."

"It’s a necessity," adds Geoff Kulawick, president of Burlington-based Linus Entertainment, True North Records and The Children’s Group.

Kulawick, who launched a booking agency under the True North banner in 2008 to promote such developing label artists as Lynn Miles, Catherine MacLellan and Madison Violet, says a hands-on approach to careers is essential these days.

"We can’t be operating in the music space and sell only one aspect of it," he says. "We’re moving from being a record company to becoming a music experience company, and anything that’s connected to the music experience that we can monetize, we want to be there."

Kulawick says his company isn’t about to go toe-to-toe with established agents, or infringe on their territory.

"It’s becoming more difficult for developing artists to find booking agents and concert promoters who are willing to take a risk on booking them, so that’s where we’re stepping in and actively performing that booking/management role for our artists," he says.

Nishimura, whose company has expanded to include a stake in digital retailer Zunior.com and handle the business affairs of musicians, says the Internet has fragmented audiences to a point where marketing can be a challenge.

"With the Internet, people have exposure to every single artist around the world all at the same time, so it is just difficult to stand out from the crowd," says Nishimura.

At the same, Nishimura says the potential opportunities through the still-evolving digital market are limitless: "There are so many different ways that digital revenue comes in – you get money from streams and single download sales, album download sales – and even though you don’t have physical distribution around the world, you can still get digital revenue from around the world."

These companies aren’t alone. In July, publicly traded Somerset Entertainment Income Fund, a Toronto-headquartered specialty music label formed on the backbone of the late Dan Gibson’s groundbreaking nature recordings, purchased digital music retailer Puretracks for $3 million.

Earlier this month Toronto’s MapleCore Ltd., home to the e-commerce site MapleMusic.com, the record labels Maple Music and Open Road Recordings and distribution arm Fontana North, announced the purchase of TicketBreak Corp., a full-service ticketing company.

The good news is these strategies seem to be working. Three of the four companies have experienced cumulative double-digit growth since 2005, with MapleCore president and CEO Grant Dexter claiming a "100 per cent revenue increase" for his umbrella of companies.

"We’ve added staff and it’s been a great run over the last three or four years," says Dexter, whose MapleMusic.com website sells merchandise, CDs and digital downloads for more than 800 Canadian artists.

Dexter says his company’s acquisition of TicketBreak allows him to offer touring artists such as Jann Arden "VIP packages for their core fan base, including meet-and-greets, exclusive seats and merchandise.

"Technology has allowed, for the first time, for that one-to-one relationship between fan and artist to be transactional," Dexter explains.

Andy Burgess, CEO of the Somerset Entertainment Income Fund – now in the midst of a supported $30.7 million takeover bid by Fluid Music – says strategic music-related deals like his company’s purchase of Puretracks will continue.

"The traditional business model is so very challenging that we have to be really innovative as business managers and figure out how to draw a profit," says Burgess, whose company employs more than 180 people around the world.

"If you have a relationship with an artist, it makes sense to see if you can then run their touring business. If we’ve got a relationship with a retailer, it makes sense to see if we can run their digital music gift cards, or put together music download promotions for their supplier.

"In a very difficult industry, it makes sense to leverage your core strength in different directions, and the smart guys will be able to do (so) in a way where there are endless possibilities."

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Plummeting advertising sales have severely wounded media companies, but CBS is scoring big with the broadcast of this season’s Super Bowl XLIV.

Months away from the biggest football game of the year, CBS (CBS, Fortune 500) is already nearing a 90% sellout for advertising spots during the game. The network expects to close enough deals to hit that mark before Thanksgiving, said John Bogusz, CBS’s vice president of sports sales and marketing.

CBS hasn’t yet topped the $3 million rival NBC charged for each 30-second spot during the 2009 telecast, according to reports.

So far, CBS’s sales have hovered in the range of $2.5 and $3 million per spot. But with more than two months to go before kickoff, CBS still has time to reel in the big buyers.

Networks typically sell 62 commercials of 30 seconds each for the game. That math means CBS only has a half-dozen or so spots left to sell for the game that airs Feb. 7, 2010. Anheauser-Busch (BUD), Coca-Cola (KO, Fortune 500), PepsiCo (PEP, Fortune 500), and several movie studios and car companies have reportedly already purchased their ad packages for the 2010 game.

For last season’s big match, NBC didn’t reach the 90% benchmark for sales until January, just a month ahead of the telecast.

Bogusz said the pace of sales is ahead of that for the 2007 Super Bowl telecast, the last time CBS televised the event. A majority of the remaining slots are in the second half of the game, he said.

Super Bowl sales can pay off big for the broadcasters that air the game. In 2007, CBS said some advertisers paid more than $2.6 million for their 30-second commercials. The network’s advertising revenue jumped 9% in the first quarter that year thanks to its telecasts of the Super Bowl and the semifinals of the NCAA men’s basketball tournament. 

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Sprint is betting the farm on the WiMax standard. The U.S. mobile phone carrier’s customers are melting away. Yet it has scrimped on cellular network capex to double down on wireless broadband. Putting another $1 billion into cash-burning partner Clearwire, while a rival technology is catching up, amounts to a binary bet for shareholders.

Sprint’s problem is simple — its customers are dissatisfied. It lost another 801,000 of its most profitable customers in the third quarter. More than four million have fled to other networks over the past year. Sprint’s bigger rivals scent blood and have been aggressively courting customers with advertising campaigns and handset offers.

Yet Sprint (S, Fortune 500) has slashed capital expenditure to an unsustainable level. Its current budget is equal to 7% of sales, which is less than half what rival AT&T (T, Fortune 500) spends — and AT&T’s revenues are more than 15 times as large as Sprint’s, so it has the advantage of scale as well.

Instead, Sprint is increasing its bet on Clearwire (CLWR), the company rolling out WiMax. This wireless technology could make broadband ubiquitous, even in rural areas. But it will face stiff competition. While WiMax is the only "4G" technology currently deployed, a rival technology backed by Sprint’s deeper-pocketed rivals will be available soon payday advance. This standard, called LTE, may be widely used within two years.

Moreover, Clearwire may need even more cash. It thinks it will burn up to $1.3 billion in the second half of the year. The $4 billion it has in the bank after the current round won’t last long at that rate. If it needs more, Sprint would have to pony up to keep majority control. That might be difficult, as it is already heavily indebted — its market capitalization is $9 billion, while its net debt was almost $16 billion at the end of last quarter.

Sprint’s stock has really become a highly leveraged bet on WiMax. The payoff for success would be enormous. But WiMax has fewer than half a million customers. The odds of it becoming a widespread standard are low if it can’t quickly build on its temporary advantage before a more powerful competitor gets going. If WiMax doesn’t catch on, it would exacerbate Sprint’s troubles.

Handset makers don’t like designing equipment for second-tier standards, and customers tend to flock to operators with the best phones. At worst, Sprint could even be forced to adopt LTE, which would be a heavy burden for the already indebted company. The clock is ticking on Sprint. 

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Recently a friend was shopping for boots at Saks, only to be told the store was out of her size. "You’re the sixth person I’ve had to turn away," the sales clerk said. My friend is not alone. But at a time of slumping sales, shouldn’t it be easier to find what you want?

Not necessarily. It looks as if some retailers ordering merchandise in the depths of the credit crisis overestimated just how bad things would get. Now certain stores appear at risk of running short of inventory heading into the crucial holiday shopping season.

What does all this mean for consumers? While there will still be plenty of discounts this season, the markdowns probably won’t approach last year’s rock-bottom level. And hot items — like Netpal laptop or Sony’s e-reader — will sell out fast. "You’re not going to see merchandise piled high like you did last year," says Stevan Buxbaum, a consultant.

The cost of inventory is one of the biggest expenses for retailers, and therefore a natural place to cut when sales are falling, as they have been for most of this year. Retailers typically try to order slightly less goods than they expect to sell. It’s a fine balancing act: Not cutting enough results in markdowns to clear unsold goods, while cutting too much risks turning customers away empty handed.

The former scenario played out last Christmas. Caught unprepared by the sharp slowdown in sales following the collapse of Lehman Brothers and other financial institutions, retailers were awash in extra goods. That resulted in lots of great deals for consumers, but those discounts ate into store profits.

This year, the opposite situation appears to be playing out. Retailers were extremely cautious heading into the holiday season, and some may not have ordered enough goods.

During the second quarter, for example, Abercrombie & Fitch’s (ANF) inventory was down 42%, compared with a 28% decline in sales. Ann Taylor (ANN) and Talbots (TLB) both shrank inventory 30% in the period. "These are some of the biggest declines in inventory we have seen since we started tracking the measure in 1992," says Lazard analyst Todd Slater.

These retailers may have miscalculated. Suddenly, the doom and gloom of the past year has been replaced by a slight optimism. Sales at stores open at least a year in September rose for the first time since August 2008. The October figures, due to be released Thursday, are also expected to show strength.

Third quarter GDP grew at a surprisingly strong 3.5%, marking an official end to the Great Recession, although most of that growth was the result of government stimulus programs such as the Car Allowance Rebate System (popularly "Cash for Clunkers). The National Retail Federation predicts holiday sales will decline 1% to $438 billion — less than last year’s 3.4% drop.

Some analysts are predicting an even stronger turnout. Customer Growth Partners, a consulting firm, released a report last week that estimated holiday sales would rise 2.4%, compared with a year ago.

Retailers that try to reorder goods to meet this small but promising uptick in demand may run out of time. For instance, American Eagle Outfitters (AEO) has one of the more nimble supply chains, but it still takes the retailer 45 days to restock merchandise that is made in China. "Many of the companies that I cover have cut inventory too much," says Richard Jaffe, a retail analyst with Stifel Nicolaus. "What do you do Dec. 15 when you’re out of goods?"

Time isn’t the only problem. Dozens of Asian factories have gone bust during the financial crisis, which will restrict supply when demand picks up, says James Lawton, a senior vice president with Dun & Bradstreet, a research and credit-monitoring firm. "A lot of capacity is coming out of the system permanently," he says.

That problem is not just restricted to apparel. Lawton says he knows of one retailer forced to delay store openings because the company that made its shopping carts went bankrupt. "They literally didn’t have enough carts," he says.

The lesson: If you can’t live without those Christian Louboutin booties, you’d better buy them now. 

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Delphi, the auto-parts maker that emerged from a four-year bankruptcy in October, is forming a new board of directors and will name retired Dupont Chief Executive John Krol as its chairman, the Wall Street Journal said.

Initially, Delphi Chief Executive Rodney O’Neal would not be offered a board seat, the paper said.

On Wednesday, Delphi plans to announce seven members of a board that includes a majority of directors with no ties to either former parent General Motors Co GM.UL or Delphi’s lenders, the paper said.

Delphi could not be immediately reached for comment outside regular U.S. business hours.

(Reporting by Sakthi Prasad in Bangalore; Editing by Erica Billingham)

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Wal-Mart Stores Inc on Monday announced its second round of price cuts on toys as the world’s biggest retailer backs up its intention to be the “price leader” this holiday shopping season.

U.S. Walmart stores are cutting prices on 100 toys, like the Buzz Lightyear talking action figure and Star Wars light sabers, by roughly 20 percent to 30 percent.

The cuts are in addition to ones the retailer implemented at the end of September, when it began selling 100 toys for $10 each.

The new prices will be available through December 25 or while supplies last.

Wal-Mart has vowed to be the “price leader” this holiday season, and announced plans on October 21 to cut prices every week until Christmas to fend off rivals and win over shoppers easy online payday loans.

After it reduced toy prices at the end of September, Target Corp responded with price cuts of as much as 50 percent on toys like Barbie and G.I. Joe.

Analysts said many of these holiday price cuts are planned in advanced, allowing retailers to protect their margins.

But such cuts can be damaging to manufacturers, because they train shoppers to expect lower prices for their goods. They can also hurt retailers’ profits if they must slash prices lower than expected to match competitors’ prices, or they can not sell enough goods to offset the lower prices.

(Reporting by Nicole Maestri, editing by Leslie Gevirtz)

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Ford Motor Co chose China’s Geely as preferred bidder for Volvo Cars while Magna said it still hoped to clinch a deal to buy a majority stake in Opel from GM after a board meeting on November 3

The shake-up of a car industry pummeled by the deepest crisis in decades continued, as Italy’s Fiat readied for the November 4 presentation of the five-year plan it hopes will turn around struggling partner Chrysler in Detroit.

Top officials from Canadian auto parts maker Magna and GM’s European unit Opel said they were confident the long-awaited deal — which has been held up after last-minute EU competition concerns — would be sealed.

“I am convinced that we will sign the contract soon if the EU … agrees. We are very, very hopeful,” said Siegfried Wolf, co-chief executive of Magna, which is seeking a 55 percent stake in Opel with its Russian partner Sberbank.

A source had told Reuters last week that there was still a possibility that GM’s board could opt out of a sale of Opel in favor of keeping the European carmaker.

The European Commission has been keeping a close eye on the transaction to ensure state aid is not misused for political purposes and was not skewed in favor of Magna.

FORD GOES FOR GEELY

U.S. automaker Ford’s selection of Geely moved the long-running sale process of its loss-making Swedish unit Volvo Car Corp savings account payday advance. closer to a conclusion but said more detailed talks were needed before any final agreement. The announcement signals that intellectual property concerns which threatened to derail the deal last week may have been overcome.

Ford did not disclose a possible sale price, but media reports have put it closer to $2 billion than the $6.45 billion it paid for Volvo in 1999.

Meanwhile, Swedish automaker Saab Automobile’s fate hung in the balance, after the Swedish government said it would have to wait for a decision on guaranteeing a 400 million euro European Investment Bank loan granted earlier this month. Niche sports carmaker Koeniggseg is buying the carmaker.

China’s BAIC agreed in September to take a minority stake in Koenigsegg, easing some of the funding concerns around the proposed purchase.

And in a further sign of car industry turmoil, Russia’s government denied on Wednesday that it had approved a plan by troubled carmaker AvtoVAZ — which is 25 percent owned by France’s Renault — to cut its workforce by a quarter.

(Writing by Helen Massy-Beresford, editing by Marcel Michelson)

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Labor market, manufacturing and consumer price data released on Thursday portrayed the U.S. economy as steadily emerging from a protracted recession, with inflation under control.

The number of workers filing new claims for jobless benefits dropped to a nine-month low last week, while consumer prices rose slightly in September and New York state factory activity perked up this month.

“Skeptics of the recovery found no friendly economic indicators today. They all point to an economy that is starting to grow again while inflation remains dormant,” said Bernard Baumohl, chief global economist at The Economic Outlook Group in Princeton, New Jersey.

In a report that pointed to scant inflation pressure but some easing in the downward momentum on prices, the Labor Department said the Consumer Price Index rose 0.2 percent last month after increasing 0.4 percent in August.

The department also said initial claims for state unemployment benefits fell 10,000 to 514,000 last week, a second straight weekly drop that hinted at some easing in the pace of layoffs.

A third report from the New York Federal Reserve Bank showed a gauge of New York state manufacturing activity rising unexpectedly to its highest in five years on surging new orders, shipments and employment.

Stocks on Wall Street ended higher as investors overcame their disappointment over quarterly results from Goldman Sachs Group and Citigroup Inc. The blue-chip Dow Jones industrial average closed above 10,000 for a second day. .N

DEFLATION RISKS EASING?

Fed Vice Chairman Donald Kohn said this week an enormous amount of economic slack was likely to keep prices under pressure, and core prices have been trending lower even though the headline CPI already appears to have bottomed out.

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“Today’s figures won’t shift the argument about inflation risks at the Fed. They don’t show deflation, but nor do they show sufficient inflation pressures to make the doves want to tighten soon,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

A Reuters poll of economists released on Thursday indicated the Fed would likely hold interest rates at their current level near zero at least until the middle of next year.

Consumer prices last month were restrained by food and housing costs. Compared to September a year ago, prices were down 1.3 percent, with the food index declining from a year earlier for the first time in 42 years.

Stripping out volatile energy and food prices, the closely watched core measure of inflation also rose 0.2 percent.

A 0.4 percent increase in new vehicle prices following the expiration of the popular “cash for clunkers” program contributed to the rise. The program, which pushed down car prices by 1.3 percent in August, had offered discounts to consumers who traded in old gas-guzzling cars for new, fuel-efficient ones. 

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American International Group has agreed to sell it’s Taiwan life insurance unit for $2.15 billion, a key step in its effort to raise cash after a U.S. government bailout last year saved the company from collapse.

Primus Financial, a new firm founded by Citigroup’s former investment banking head in Asia and a Chinese partner, has agreed to purchase Nan Shan Life, AIG said on Tuesday, ending a roughly five-month auction that saw several corporate and private equity bidders pursue the division.

With the Nan Shan agreement sealed, AIG is now focused on raising cash from two other major assets in Asia. Hong Kong-based life insurer AIA is seeking a more-than $2 billion initial public offering while American Life Insurance Co, which generates half its revenue in Japan, is seeking a reported $5 billion in an IPO.

Both companies have also attracted acquisition interest, though nothing yet has materialized.

The sale of Nan Shan, in an auction run by Morgan Stanley, allows AIG to check one business off its list of units to sell, after the United States injected $80 billion in taxpayer money into the company after it nearly collapsed late last year.

Primus, run by former Citi executive Robert Morse, and Hong Kong investment group China Strategic Holdings will pay $2.15 billion for AIG’s 97.5 percent stake in Nan Shan, AIG said on Tuesday.

Some analysts and bankers involved in the deal said putting a valuation on the AIG’s Taiwan life insurance unit was difficult instant payday loan no telecheck.

“The pricing is tricky. If you just look at the book value of Nan Shan, then the acquisition price is at a 30 percent discount,” said Pandora Lee, analyst with UBS.

“But for an insurance company, book value is not the only consideration, there are other factors like the people, the products etc,” Lee said. “So its difficult to say at this point if they’ve got a good deal or not.”

Primus and China Strategic will seek loans from Taiwanese banks to finance the deal.

Primus co-chief executive Wing-fai Ng said in an interview with Reuters previously that Primus plans to use Nan Shan as a base to expand to Hong Kong, Malaysia and Japan.

Nan Shan, which has assets of $46.4 billion, has 36,000 sales agents in Taiwan and a market share of 10 percent with its 10 million customers.

The agreement marks the end of an auction that spanned several months and involved multiple bidders, including private equity firms, such as the Carlyle Group. Primus had been competing in the end with Chinatrust Financial.

(Additional reporting by Rachel Lee and Chyen Yee Lee in TAIPEI and Parvathy Ullatil in HONG KONG; Editing by Valerie Lee)

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