13 Feb 2015
Weakness in US retail sales puzzling - Nomura
FXStreet (Bali) - According to Nomura Economists, overall weakness in core US retail sales over the past few months is puzzling given lower gas prices, consistently more optimistic consumer confidence, and the robust payroll growth over the past year.
Key Quotes
"The Census Bureau today reported that US retail sales declined by 0.8% m-o-m in January, a bigger decline than expected (Nomura and Consensus: -0.4%), and follows a 0.9% decline in December. As expected, a decline in sales at gasoline stations (-9.3%) from the drop in energy prices weighed heavily on overall sales. However, elsewhere sales were also on the soft side, as core retail sales (excludes auto, gasoline station, building material, and food services and drinking places sales) rose by only 0.1% (Nomura: +0.5%, Consensus: +0.4%) after falling by 0.3% in December (previously reported as +0.4%)."
"In terms of GDP tracking, because core retail sales for December were revised up by 0.1pp, our Q4 GDP tracking estimate was revised up to 2.0% from 1.9% previously. In addition, retail inventories were stronger than the BEA assumed in its first estimate of Q4 GDP, and this pushed up our Q4 tracking estimate by 0.2pp to 2.2%. In contrast, our Q1 GDP tracking estimate was revised lower by 0.2pp to 2.5% from 2.7%, due to the weaker-than-expected core sales in January."
"The overall weakness in core retail sales over the past few months is puzzling given lower gas prices, consistently more optimistic consumer confidence, and the robust payroll growth over the past year. However, this recent softness corroborates other reports on business activity and sentiment, which point to some loss in economic momentum after the strong buildup in Q2 and Q3 2014."
Key Quotes
"The Census Bureau today reported that US retail sales declined by 0.8% m-o-m in January, a bigger decline than expected (Nomura and Consensus: -0.4%), and follows a 0.9% decline in December. As expected, a decline in sales at gasoline stations (-9.3%) from the drop in energy prices weighed heavily on overall sales. However, elsewhere sales were also on the soft side, as core retail sales (excludes auto, gasoline station, building material, and food services and drinking places sales) rose by only 0.1% (Nomura: +0.5%, Consensus: +0.4%) after falling by 0.3% in December (previously reported as +0.4%)."
"In terms of GDP tracking, because core retail sales for December were revised up by 0.1pp, our Q4 GDP tracking estimate was revised up to 2.0% from 1.9% previously. In addition, retail inventories were stronger than the BEA assumed in its first estimate of Q4 GDP, and this pushed up our Q4 tracking estimate by 0.2pp to 2.2%. In contrast, our Q1 GDP tracking estimate was revised lower by 0.2pp to 2.5% from 2.7%, due to the weaker-than-expected core sales in January."
"The overall weakness in core retail sales over the past few months is puzzling given lower gas prices, consistently more optimistic consumer confidence, and the robust payroll growth over the past year. However, this recent softness corroborates other reports on business activity and sentiment, which point to some loss in economic momentum after the strong buildup in Q2 and Q3 2014."