US: Retail sales were softer than expected in April - Natixis

Thomas Julien, Research Analyst at Natixis, notes that the US retail sales rose less than expected in April, gaining 0.4% MoM.

Key Quotes

“Car sales recovered slightly with also a modest increase in gasoline sales, but the control group of retail sales (the portion the BEA is using to estimate GDP) surprised on the downside, increasing by only 0.2% MoM. However, past month data were revised upward. All in all, the trend in retail sales remains good and we maintain a positive outlook for consumption.”

“Retail sales rose by 0.4% MoM in April, below consensus expectations (+0.6% MoM) and ours (+0.7% MoM). As expected car sales recovered after 3 months of decline. Gasoline sales were up, but slightly less than expected given the rise in prices during the period.”

“The control group sales surprised on the downside, rising by a modest 0.2% after being revised upward in March to 0.7%. Everything else being equals, this report is positive for Q1 growth (with a potential for upward revision for consumption) and slightly less positive for Q2.”

“In short, report is slightly softer than expected but the trend in retail sales remains stable. Our view is that employment gains as well as accelerating wages will support households’ disposable income in the near term, which should translate into more consumption. However, we do not expect car sales to recover. On the contrary, we believe sales will keep decelerating as the massive catch up effect that supported sales in 2016 should start fading.”