US Retail Sales Bounces Back but More is Required for a Rate Hike - ING
James Knightley, Research Analyst at ING, notes that the US retail sales
for April were up 1.3%MoM, above the 0.8% consensus while the “control
group” which strips out some of the most volatile components reported
growth of 0.9% (the strongest outcome since March 2014) versus the 0.4%
consensus expectation.
Key Quotes
“It looks a decent report throughout with 11 of the 13 major categories
reporting growth. Autos were up 3.2%, gasoline stations sales up 2.2%
while the non-store category (largely internet) saw sales rise 2.1%.
Building materials saw sales fall 1%MoM, but it has had a strong run of
late with the YoY growth looking healthy at +5.5%.
This report is likely to generate some encouraging headlines suggesting a
bounceback in consumer activity, and it certainly is good news.
However, the Federal Reserve will want to make sure it isn’t just a
one-off. With other activity indicators suggesting that there has been
something of a loss of momentum over the past twelve months we still
favour just one-rate rise this year, which will most likely come in
3Q16.
We continue to doubt that the Fed will hike in June. This partly reflect
the need for a better run of data, but also external risks. One of
those is Brexit – should the UK vote to leave the EU on June 23rd this
could see both the euro and sterling tumble against the dollar, which
will lead to a tightening of financial conditions that may deter the Fed
from tightening policy.”
