US: Below par retail sales - Nomura

Research Team at Nomura, notes that the Census Bureau reported that US retail sales declined by 0.3% in March, falling well below market expectations and our forecast for a 0.1% increase.

Key Quotes

Auto sales declined by 2.1%, heavily weighing on headline sales as expected. However, sales excluding autos increased by only 0.2% (Nomura: +0.5%, Consensus: +0.4%). Core retail sales (excludes auto, gasoline, building material, and food services and drinking places sales) increased by a meager 0.1% (Nomura: +0.3%, Consensus: +0.4).

The details of the retail sales data were broadly weak. Notably, categories of discretionary spending either declined or showed only slight gains.

Q1 GDP tracking update: Nominal core retail sales came in weaker than we had expected in March (actual: 0.1% vs Forecast: 0.3%). However, January and February core retail sales were revised up and today’s PPI data, which are relevant for consumer prices in the PCE, were net negative, which implies more real PCE all else equal. In contrast, the relevant components from PPI data for deflating nominal equipment and inventory investment came in somewhat stronger than expected, a negative for real growth. All in all, our Q1 GDP tracking estimate was revised down 0.1pp to 0.7% from 0.8%, back in line with our official Q1 GDP forecast.”