A preview of the US retail sales data due on Thursday
The consensus for US retail sales in May is a rise of 1.2% and 0.8% excluding autos. Last month, the market was caught by surprise when retail sales excluding autos rose just 0.1% compared to +0.5% expected. One economics team that accurately forecast the flatish reading was at Bank of America Merrill Lynch. They have a metric that looks at credit card spending from Bank of America customers -- a big base to be sure.
This month, their metric forecasts sales rising 0.8% ex-autos, which is identical to the consensus. However, excluding autos and gas they see some slight weakness with sales up 0.3% compared to the +0.5% consensus.
It's a metric worth watching because it's been much better than the consensus estimate.
They note a correlation of 0.86 over the past 12 months increasing to 0.93 incorporating revisions. That compares to the consensus forecast that only had a correlation with the Census data of 0.69 over the past
year. Moreover, during this period, the consensus has tended to have an upward bias.
