Preview for the April 2017 US retail sales report
The US consumer has been talking the talk and now it's time to walk the walk.
Consumer confidence has surged since the US election but it hasn't resulted in more spending.
On Friday, May 11 at 8:30 am ET the hope is that signs of life will emerge from the April retail sales report. Unfortunately, early signs are troubling.
But first, here is what's expected:
- Retail sales +0.6% m/m
- Ex autos +0.5%
- Ex autos and gas +0.4%
- Ex autos, gas and building supplies +0.4%
That last line is most important. It's called the control group because it strips out the most-volatile components. Generally, it's the one the market reacts to. Estimates range from +0.2% to +0.7%.
In March, the reading was the best in 11 months but that was largely a rebound from a very disappointing February. Officials at the Census Bureau attempt to adjust for holidays but it's especially difficult in the Spring because Easter varies and weather is wildly variable.
In any case, it's a critical month because there have so far been no signs of a corresponding pickup with improving confidence.
The problem is that the first signs from April were poor.
Autodealers revealed sales numbers on May 2 and they missed expectations badly.
- GM sales -5.8% vs -2.0% est
- Fiat Chrysler sales -7% vs -5.9% est
- Nissan sales -1.5% vs +1.5% est
- Toyota sales -4.4% vs -4.2% est
- Ford -7.1% vs -4.7% est
Bottom line
So you have sentiment data that says sales should be strong and partial data that warns it could be weak.
That would generally set up a two way trade but given how the US dollar has rallied this week and how high expectations for a June hike remain, I see the risks to towards disappoint for the data and the US dollar. It will only take a 0.1 or 0.2 pp miss in the control group to stifle USD.
We'll have full coverage on Friday. For more numbers, see the economic calendar.
