US retail sales preview - Nomura

Analysts at Nomura noted the retails sales on Friday and offered a preview as being one of the two major data highlights for the US dollar to the the week, (the other is the Key CPI preview - Nomura).

Key Quotes:

"Retail sales: We expect a modest 0.2% m-o-m increase in core (“control”) retail sales (Consensus: 0.4%). The impact of the recent hurricanes increases the uncertainty in our forecast. As the recovery continues in the Greater Houston area, we think increased replacement purchases will boost retail sales in September.

However, Hurricane Irma brought extensive power outages in Florida, which may have resulted in considerable loss of sales.

Yet, these transitory effects from the hurricanes will likely not change our outlook on personal consumption over the medium term as labor markets remain healthy and steady growth in personal income continues. Among noncore components, we expect a sharp increase in sales at auto and auto parts dealers.

September light vehicle sales increased sharply after many months of disappointing sales. Although much of the increase was due to a pick-up in fleet sales, it is likely to show a strong increase in sales at dealerships as well.

Moreover, sharp increases in retail gasoline prices caused by Hurricane Irma’s landfall in Florida may boost sales at gas stations sharply. Altogether, our forecast for total retail sales is 1.5% m-o-m (Consensus: 1.7%). Excluding autos and auto parts, we expect an increase of 0.7% m-o-m (Consensus: 0.9%)."