Article / 16 April 2012 at 4:14 GMT

3 numbers to watch: US Retail Sales, Empire Manuf. & inventories

Mads Koefoed Mads Koefoed
Head of Macro Strategy / Saxo Bank

Though markets will likely have one eye on end-of-week events like the G20 Finance Ministers summit (Friday) and in particular the French presidential first round election (Sunday) we start the week off with several high-profile releases in the first two days. Today is spearheaded by US Retail Sales, with honourable mentions to US Empire Manufacturing and US Business Inventories. We also get Eurozone Trade Balance (09:00 GMT), TIC Flows (13:00), and the forward-looking housing market indicator NAHB Housing Market Index (14:00). Shall we?

  • Mar. US Retail Sales (12:30) to rise sturdily: While the labour market has gotten off to a solid start this year income has not, which is worrying for the longer-term outlook for consumer spending and why we continue with our 2% GDP (and personal consumption) forecast(s) for this year. In the really short run, however, today's Retail Sales are expected to be moderate (after very solid gains in February of 1.1%) driven by healthy chain store sales. The ICSC US Chain Store Sales Index is up some 2.4% in March from a month earlier. Vehicle sales, however, declined 5.2% on the month and will subtract, so consensus forecasts a 0.3% increase m/m, 0.6% excluding autos.

US Retail Sales vs. Vehicle Sales

  • Apr. US Empire Manufacturing (12:30) to show strong growth again? Activity in the state of New York has rebounded robustly this year after reaching a low point of -7.4 in September last year and now stands at 20.2 with five positive readings in a row. Consensus forecasts that this has continued in April and predicts 18, which corresponds to GDP growth of 2.8% (q/q ann.) though the new orders series has trended down quite a bit recently and suggests a weaker outlook. When you ask about business prospects six months ahead, however, managers are quite optimistic, with a 47.5 response in March - though that has come down slightly from early in 2012 (peaked at 54.9 in Jan.). The average Empire Manufacturing number for the first quarter of 17.7 also predicts growth of 2.8%, not far from the current tracking estimate in the mid-2% area.

US GDP vs. model based on Empire Manufacturing

Feb. US Business Inventories (14:00) to support the upward-moving 1Q GDP tracking estimate? A reason first quarter tracking estimates started down at or even below 2% was because of an expected payback for the sharp increase in 4Q'11 in inventories, which added a full 1.81pp to GDP growth of 3%. And while the first quarter will be weaker growth-wise inventory (and trade) data suggests that last quarter was quite sound as well. Consensus looks for a 0.6% m/m increase in February in Business Inventories (meaning that inventories will be estimated in the first GDP report due 27 April.) based on the sharp 0.9% increase in wholesale Inventories as we saw in the release on 10 April.

US Inventories


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