Forex News – Retail sales data show US consumer in good form during December
January 14, 2014 3:17 pm
(click to enlarge)
Following the disappointing employment report, today’s advance retail sales for December was the most important indicator of the current week concerning the US economy. Specifically, the question is whether the much weaker-than-expected nonfarm payrolls is an indication of a weakening US economy or if other indicators are pointing to a decent economic recovery and that the employment report was a weather-related one-off.
Following today’s release on retail sales, the indication is that consumer spending in December was relatively healthy. The month-on-month change for total retail sales was 0.2%, which was a touch better than the 0.1% expected by economists. Excluding auto sales the monthly change was 0.7%, significantly stronger than the 0.4% expected by economists.
However, this unexpected strength was counterbalanced by a downward revision of the November numbers. Total retail sales for November dropped to 0.4% from 0.7%, whereas excluding autos the figure was revised lower to 0.1% compared to 0.4% originally reported.
So-called ‘core’ retail sales, which exclude automobiles and parts, fuel, food services and building materials, rose by a relatively high 0.7% clip in December compared to a downwardly revised 0.2% monthly increase in November. ‘Core’ retail sales is very closely related to the measure of consumer spending that is included in GDP.
As monthly changes can be volatile and can mask the longer-term trend, a reference to the annual changes shows the big picture better. The annual changes are shown in the graph above. The annual change of total retail sales is running at 4.2%, whereas one measure of ‘core’ retail sales, which excludes food services and motor vehicle-related sales is rising at a 3.6% annual pace.
To sum up, the retail sales report was relatively upbeat compared to expectations and it shows that the US consumer was in quite satisfactory – if unspectacular – condition during December. This in turn bodes well for consumption in 2014. Retail sales data should reassure the Fed in order to continue with tapering and the dollar should potentially benefit from such a development.
(click to enlarge)
Following the disappointing employment report, today’s advance retail sales for December was the most important indicator of the current week concerning the US economy. Specifically, the question is whether the much weaker-than-expected nonfarm payrolls is an indication of a weakening US economy or if other indicators are pointing to a decent economic recovery and that the employment report was a weather-related one-off.
Following today’s release on retail sales, the indication is that consumer spending in December was relatively healthy. The month-on-month change for total retail sales was 0.2%, which was a touch better than the 0.1% expected by economists. Excluding auto sales the monthly change was 0.7%, significantly stronger than the 0.4% expected by economists.
However, this unexpected strength was counterbalanced by a downward revision of the November numbers. Total retail sales for November dropped to 0.4% from 0.7%, whereas excluding autos the figure was revised lower to 0.1% compared to 0.4% originally reported.
So-called ‘core’ retail sales, which exclude automobiles and parts, fuel, food services and building materials, rose by a relatively high 0.7% clip in December compared to a downwardly revised 0.2% monthly increase in November. ‘Core’ retail sales is very closely related to the measure of consumer spending that is included in GDP.
As monthly changes can be volatile and can mask the longer-term trend, a reference to the annual changes shows the big picture better. The annual changes are shown in the graph above. The annual change of total retail sales is running at 4.2%, whereas one measure of ‘core’ retail sales, which excludes food services and motor vehicle-related sales is rising at a 3.6% annual pace.
To sum up, the retail sales report was relatively upbeat compared to expectations and it shows that the US consumer was in quite satisfactory – if unspectacular – condition during December. This in turn bodes well for consumption in 2014. Retail sales data should reassure the Fed in order to continue with tapering and the dollar should potentially benefit from such a development.
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