James Knightley, chief international economist at ING, suggests that the US retail sales for May are broadly in line with expectations, but significant upward revisions give the report a positive glow.

Key Quotes

“Headline sales rose 0.5%month on month versus the 0.6% consensus prediction, but April’s figure went from -0.2%%MoM to now become +0.3%.”

“The “control group” which strips out some of the volatile components, such as autos, gasoline stations and building materials, was actually a touch above expectations, rising 0.5%MoM versus the 0.4% consensus, while April’s figure is now +0.4%MoM growth versus the 0% figure originally reported.”

“We already knew that auto unit sales surged 5.5% in May, but this has only been translated into a 0.7% increase in the value of auto sales, thereby suggesting some fairly steep price discounting last month.”

“In general, there has been some softening in the recent economic data, but we remain upbeat of the prospects for retail sales and consumer demand more broadly.”

“So while the Federal Reserve does seem to be shifting towards rate cuts, market expectations of 100bp of easing look too aggressive to us.”

“We look for 50bp of easing in 2H19.”


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