News & Analysis

Retail sales data for April showed consumption conditions in the US remained robust amid the first signs of tighter financial conditions and rising prices.

Retail sales ex auto and gas, which is the more representative measure given that the total value data doesn’t account for the rise in new car prices and the decline in gas prices in April, printed slightly above expectations at 1% in April. After removing the upwards contribution from new car prices and increased new car sales, retail sales ex auto printed at just 0.6% MoM.

The headline measure, which incorporates the opposing impact from autos and gas prices, printed slightly below expectations at 0.9% MoM.

With April’s data having a limited impact on markets due to the relative accuracy of the predictions and the robust pricing of the Fed’s next moves, the bigger impact came from the upward revisions in March’s data. Headline retail sales for March were revised upwards from 0.5% to 1.4%, while sales ex autos were also revised a percentage point higher to 2.1%.

Within the data, motor vehicle and parts dealers sales rose 2.2% in April, the largest upwards contribution along with the 4% increase in sales from miscellaneous store retailers. Partially offsetting this rise was a 2.7% contraction in the total value of gasoline sales and the 0.5% reduction in sport goods, hobby, musical instruments and book stores sales.

The Census Bureau’s data tells a story that the impact of today’s retail sales on cross-asset pricing wasn’t just due to the accuracy of economists’ predictions, but also the volatile nature of the data.

Retail sales have a tendency for large revisions in the following months, as evidenced by March’s large revisions today. While the recent trend has been that of upwards revisions, the risk for markets using this indicator in isolation is that it is abruptly revised downwards in May’s report. Additionally, it is difficult to distinguish the inflation impact on overall sales, which tends to lift the total value before the impact of price pressures weigh on consumption and leads to a contraction. Given this, it is understandable that FX markets looked through today’s data.




Simon Harvey, Head of FX Analysis


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