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.
“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.”