In March, US retail sales rose by 1.6% M/M, beating the market consensus of 1.2% M/M. Also the previous figure was upwardly revised. The breakdown shows that the increase was led by motor vehicles and parts (6.7% M/M), but also core retail sales (excluding autos & gas) rose significantly (0.7% M/M). Only sales of electronics (1.3% M/M) and gasoline (-0.4% M/M) fell, while sales of building materials (3.1% M/M), clothing (2.3% M/M), furniture (1.5% M/M) and sporting goods (1.0% M/M) were the main drivers pushing core retail sales up. In March, retail sales rose for the third consecutive month, which raises expectations that consumers might have played a bigger role in the economic recovery in the first quarter of 2010 and indicates that consumers are gaining confidence and more willing to spend.

Consumer prices rose by 0.1% M/M in March, in line with expectations. On a yearly basis, CPI inflation rose from 2.1% Y/Y to 2.3% Y/Y, slightly below the consensus estimate (2.4% M/M). Looking at the details, prices of food & energy (0.2% M/M), medical care (0.3% M/M) and education (0.3% M/M) rose in March, while prices of apparel (-0.4% M/M), transportation (-0.1% M/M) and recreation (-0.1% M/M) dropped. Core CPI, excluding food & energy, surprised again on the downside of expectations dropping from 1.3% Y/Y to 1.1% Y/Y, the smallest annual increase since January 2004. The low core CPI reading is recently increasing deflationary fears, but part of it might be due to huge declines in rents, housing prices and housing costs.


EMU: industrial production extends rebound

In February, euro zone industrial production extended its rebound, rising for the ninth consecutive month. On a monthly basis, industrial production rose by 0.9% M/M, while the consensus was looking for only a marginal increase (0.1% M/M). The details show an increase in both intermediate (1.5% M/M) and capital (0.9% M/M) goods, while energy (-0.4% M/M), durable consumer (-0.6% M/M) and non-durable consumer (-0.2% M/M) dropped. After the euro zone recovery stalled in the final quarter of 2009, the production data raise expectations that the euro zone economy will expand again in the first quarter of 2010.