US: Focus on Retail Sales, PPI and Beige Book - Rabobank
Philip Marey, Senior US Strategist at Rabobank, suggests that in the US,
the retail sales figures for March will give us an idea of the strength
in consumer spending despite the global economic and financial turmoil.
Key Quotes
“The US economic recovery is
currently driven by households, while business investment and net
exports are a drag on GDP growth. The deteriorating global economy, the
strong US dollar and the low price are hurting the manufacturing and
mining sectors. In contrast, the services sector – which is largely
shielded from the global economy – continues to thrive and produce jobs.
This supports household income and consumer confidence. Note that low
oil prices are a negative for the energy sector, but they are supportive
for consumer spending power.
The US PPI will provide a glimpse
of inflation in the pipeline. Producer price inflation fell from 2.1% in
April 2014 to -1.6% in October 2015, but since then we have seen a
rebound to 0.0% in February. The consensus expectation is that PPI
inflation has moved well into positive territory in March with 0.3%
year-on-year. The rebound would confirm the Fed’s view that the low
inflation episode of last year is a transitory effect caused by the
earlier decline in oil prices.
This evening, the Fed will
release the Beige Book that will serve as input for the next FOMC
meeting on April 26-27. FOMC participants will be most interested in the
impact of the global economic and financial developments on the
momentum of the US economy, and signs of inflation and wage pressures.”
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