US Q4 GDP may be revised slightly upward - Natixis

Natixis Economic Research note says the upbeat US retail sales figure indicates the consumption is off to a good start in 2017 and thus the Q4 numbers may be revised slightly upward in the second estimate of GDP (due in two weeks).

Key points

Retail sales rose by 0.4% MoM in January, higher than consensus expectations (+0.1% MoM) and ours (+0.2% MoM). The acceleration in retail sales was broad based (see table) except for the widely expected decline in car sales.

The control group sales surprised on the upside as well, gaining 0.4% after 0.4% in December (revised upward). This group is used by the BEA to estimate GDP and is more indicative of the trend of consumption.

In short, today’s report is much stronger than expected and displays a solid core trend in consumption. In addition, it suggests that Q4 numbers may be revised slightly upward in the second estimate of GDP (due in two weeks). Looking forward, as employment gains remain solid while wages are accelerating, we maintain a positive outlook for consumption.