US: Strength in consumption looks unsustainable – ABN AMRO
Bill Diviney, senior economist at ABN AMRO, notes that the US Retail sales came in weaker than expected at -0.3% MoM, while ‘core’ retail sales (ex-autos and gasoline) came in at 0.0% (ABN/consensus for both measures: +0.3%).
Key Quotes
“Upward revisions to August sales comfortably offset this weakness, particularly the ex-autos/gas measure, which was revised up to 0.4% from 0.1%. Indeed, retail sales for the full quarter expanded at a robust 6.0% annualised pace, down only modestly from the 7.7% growth registered in Q2. This implies Q3 private consumption growth of 3.0-3.5%, down from 4.7% in Q2.”
“Such growth rates are unsustainable, in our view, particularly given the slowdown in monthly average payrolls gains, which have fallen to +161k in the year to date, down from +223k in 2018.”
“Looking ahead, we continue to expect the knock-on effects of a weaker manufacturing sector to drive a broader slowdown in the US, primarily via lower jobs growth. We expect payrolls growth to slow further over the coming months, with the monthly average perhaps dipping below +100k in 2020.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
