James Knightley, chief international economist at ING, notes that the US retail sales surged 1.6% higher in March, its best reading since September 2017, and better than market expectations of a 1.1% gain.
“Motor vehicles and parts jumped 3.1% month on month, which was flagged by very firm new car sales numbers from manufacturers earlier in the month while gasoline station sales were also strong (+3.5%MoM) due to the significant rise in gasoline prices over recent months. Gasoline bottomed at $2.23/gallon on 8 January according to the American Automobile Association while the national average stands at $2.84 today.”
“Even outside of these volatile sectors the story is encouraging with 12 of the 13 subcomponents reporting growth. Furniture saw sales rise by 1.7%, clothing was up 2% and non-store retail rose 1.2%. Sporting goods were the one negative, falling, 0.3%MoM. This means that the "control group", which removes autos, food, gasoline and building materials and better matches the consumer spending component of GDP rose 1%MoM versus the consensus estimate of a 0.4%MoM increase.”
“Retail sales appear to be bouncing back after a weak end to 2018. With employment continuing to rise, wage growth picking up and consumer sentiment remaining firm, we look for consumer spending to make an ongoing positive contribution to US GDP growth. Currently, the Atlanta Federal Reserve GDPNow model is suggesting the economy expanded at a 2.4% annualised rate in 1Q19, but after today's figures, this is likely to push towards 2.6%.”
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