Traders are waiting for the release of US Retail Sales today as it is basically the second top-tier release for market participants, following yesterday’s big CPI data release.
Retail sales in the US declined 1.1% month-over-month in December 2022, following an upwardly revised 1% drop in November and worse than forecasts of a 0.8% fall.
Sales at gasoline stations recorded the biggest decrease, followed by furniture stores, motor vehicle dealers, electronics, and appliances stores, miscellaneous and nonstore retailers.
In contrast, sales were up 0.3% in building materials and garden equipment stores (0.3%) and sporting goods, musical instruments and book sellers (0.1%). Sales at food and beverage stores were flat.
Retail sales aren’t adjusted for inflation and part of the decrease in December can be explained by a fall in goods prices during the month and a holiday shopping that was pulled forward into October.
However, excluding sales at gasoline stations, sales were down 0.8%, in another sign of a weaker-than-expected holiday shopping and a slowdown in consumer spending amid high inflation and interest rates
The consensus expected for Retail Sales Control Group in January is 0.3% and for Retail Sales headline is +1.8%. Bank of America is a huge retail bank in the US and they have much higher expectations, a whopping +2.6% and +3.0% respectively.
Bank of America are apparently basing their outlying estimates on their in-house proprietary credit card spending data during January.
Scotiabank is also above consensus, looking for a headline +2.2%. They note that “The US consumer’s fundamentals remain sound. Job markets are very tight, wage gains are decent.”
They add that “The debt-to-income ratio is at a twenty-two year low, debt payments as a share of incomes are toward record lows, cash balances are very high after socking away pandemic stimulus and Americans have a one-way option to refi in a falling rate environment that locked in pandemic lows for 30-year mortgages.”
