US CPI and retail sales due today - preview

Author: Eamonn Sheridan | Category: News

US CPI and Retail Sales (both September) are due at 1230 GMT

Previews via Barclays:
  • For the September CPI report, we forecast headline CPI at 0.6% m/m and 2.3% y/y, boosted by the spike in retail gasoline prices in September.
  • For core CPI we forecast a reading of 0.2% m/m and 1.8% y/y.
  • For the NSA CPI index, we expect a reading of 247.0
Retail Sales
  • We forecast retail sales to have increased 1.7% m/m in September.
  • Manufacturers' reports released earlier this month showed vehicle sales surprised strongly to the upside in September, partly fuelled by the post-hurricane recovery in demand. As a result, we look for substantial rise in sales at the retail level.
  • Further, gasoline prices indicate a rise in gas station sales. For sales excluding motor vehicles we forecast a 0.9% rise.
  • Excluding volatile items such as autos, gasoline stations, food services and building materials, we expect retail sales to be up 0.6% m⁄m.

And via Deutsche Bank:
  • The print should get a significant boost from gasoline prices, which likely reflects some hurricane-related shortages.
  • Last month's outperformance, which broke the previous streak of five consecutive misses relative to consensus, was mostly due to a strong reading for shelter inflation, which at +0.46% was the largest monthly gain since October 2005. Part of this increase was the result of a snapback in lodging away from home (+5.1% in August vs. -4.9% in July), but rent and owners' equivalent rent (OER) were also robust.
  • On Friday, we could see some modest negative payback for rent and OER, and we would caution that lodging away from home may dip again due to the unfortunate weather events last month. Indeed, this was the case post Hurricane Katrina, when the aforementioned component dropped -3.2% in September 2005. That said, this is only a small portion of the core CPI (1.2%) so the risk is at most a couple of basis points. Thus, while our core CPI forecast would have the effect of raising the year-over-year growth rate a tenth to 1.8%, there is a slight chance that it rounds down to 1.7%.
Retail Sales
  • will sharpen forecasters' estimates of Q3 real GDP.
  • Headline retail sales (+1.3% vs. -0.2%) will undoubtedly be boosted by unit motor vehicle sales, which surged to 18.47 million last month-the highest level since July 2005 (20.6 million). Some of the acceleration in auto sales likely reflects a rebound in demand from hurricane-impacted regions. However, we expect sales excluding automobiles (+0.8% vs. +0.2%) to also show a healthy gain.
  • Most important, of course, will be retail control, which excludes automobiles, gasoline stations and building supplies. This is the portion of retail sales that is a direct input into goods spending in the GDP accounts. Our forecast for retail control (+0.5% vs. -0.2%) is consistent with our expectation of 2% real PCE growth last quarter.