US Retail Sales Fail to Pick Up Momentum in March - ING
Rob Carnell, Chief International Economist at ING, notes that the US
retail sales fall 0.3% mom in March, while the "core" rises only 0.1%
“Even when you take some upward revisions into account for February, this is yet another soft retail sales release, and makes an April rate hike look far-fetched
Consensus was hoping that despite the likelihood that the headline retail sales figure would be depressed by very weak auto sales in March, rising gasoline prices would provide some offset at the headline level, and a pick up in underlying sales would prop up the core figures. This did not happen. Indeed, the headline fell by 0.3% mom, much worse than the 0.1% increase expected, and core figures were also weak, with the control group for sales which strips out most of the volatile components, rising only 0.1%mom.
Moreover, when you take into account that these figures are dollar amounts, and not adjusted for inflation, which most likely rose in March as a result of higher energy prices (data released tomorrow), then it looks as if real consumer spending will barely register 1.0% growth in 1Q16, and real GDP for the same period will be equally soft.
All of which makes it seem highly unlikely that the April FOMC meeting will deliver a further rate hike on top of the December 15 hike. Indeed, some expectations that the April meeting might be used to flag a possible June hike also look stretched following this and other recent soft activity data. We expect some softening in the rhetoric of Federal Reserve speakers in advance of this month's meeting, so a "no change" will not be a surprise for markets.”