US: Retail sales to receive boost from hurricanes - Westpac

Analysts at Westpac point out that Aug was a soft month for US retail, in part because the arrival of hurricanes Irma and Harvey weighed heavily on car sales in affected regions.

Key Quotes

“Nationwide sales were down 1.6% as a result. That said, given both headline and core retail sales fell 0.2% in the month, households also clearly stocked up ahead of the storm, offsetting some of the weakness.”

“Come Sep, not only will there be a sharp reversal in car sales (Reuters has reported sales of new cars in the Houston area were up 109% in the three weeks after the storm versus the three weeks prior), but significant household spending will also need to take place to replenish household stocks and make necessary initial repairs to buildings. As a consequence, retail sales will jump in Sep.”

“It is worth highlighting however the 0.2% fall in core sales in Aug and the downward revisions to Jul. These results imply that, sans weather, the US consumer remains reluctant to spend. This is a key reason why GDP growth is likely anchored to 2.0% despite job growth and sentiment.”

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