News & Analysis

  • Advance retail sales increase 0.4% MoM, below expectations of a 0.8% increase
  • Retail sales ex-auto increased 0.4% MoM, in line with consensus
  • Retail sales ex-auto and gas increased 0.6% MoM, above expectations of 0.2% and up from -0.5% in March
  • Retail sales control group increased 0.7% MoM, above expectations of 0.4% and from -0.4% in March

After two consecutive months in decline, US retail sales increased in April by 0.4% MoM, resulting in an annual increase of just 1.6%. Still considerably below the rate of inflation in annual terms, and matching the latest CPI estimate in monthly terms, today’s data has done little to push back on calls that the US consumer is finally feeling the pinch and that real consumption is set to decline from Q1’s annualised rate of 3.7%. While the details of the report were slightly stronger than the headline measure suggests, with all core measures either meeting or exceeding expectations in monthly terms, this was partly offset by a downward revision in last month’s data. Furthermore, for those looking for the Fed to have to hike rates further, the argument that core goods inflation is rebounding is somewhat hampered by the continued decline in demand conditions for these products. For example, sales in furniture and home furniture goods fell -0.7% on the month, electronic and appliance stores -0.5%, clothing -0.3%, and sporting goods and books -3.3%.

For markets, the retail sales data provides an extra bit of colour to what is looking like a picture of a cooling US economy, which for all intents and purposes should leave the Fed at a terminal rate of 5-5.25% in the short-term.

However, despite concerns that the US consumer is about to capitulate given the signal provided by leading indicators such as the University of Michigan consumer sentiment index, this is yet to become visible within the hard data. With the data not swinging one way or the other in a compelling manner, this release had little impact on markets.

The renewed decline in the University of Michigan measure of consumer sentiment doesn’t bode well for retail sales moving forward

Simon Harvey, Head of FX Analysis


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