19 Jan 2015
Downside risks beginning to rise for the US – Nomura
FXStreet (Barcelona) - The Research Team at Nomura explains that the recent release of major economic indicators disappointed the markets raising some concerns of a slowdown in the US growth story.
Key Quotes
“Headline retail sales declined sharply by 0.9% in December and November’s figure was revised down to an increase of 0.4% from a previously reported increase of 0.7%. The major surprise came from an unexpected decline of 0.4% in core retail sales (Consensus: +0.4%, Nomura: +0.5%).”
“Consumer prices also fell short of our expectations, with headline CPI declining 0.4% (Nomura: -0.3%) and core prices remaining essentially unchanged (+0.003%) in December when we had expected a decent increase of 0.2% (0.18%). Core goods prices marked a decline of 0.3% on lower apparel (-1.2%) and used car prices (-1.2%) while core services slowed to 0.1% primarily due to a 5.0% decline in airline fares.”
“There is some evidence that momentum is slowing. For instance, in addition to the weak December retail sales, the Philly Fed index dropped sharply in January, pointing to a slowdown in manufacturing activity.”
“Our Q4 GDP tracking estimate ended the week at 3.4%, well below the strong Q3 growth rate of 5.0% but still a solid pace of economic growth. Moreover, financial conditions, broadly speaking, remain supportive for growth. Nevertheless, further deterioration of business sentiment and tighter financial conditions could raise the downside risks to our outlook.”
Key Quotes
“Headline retail sales declined sharply by 0.9% in December and November’s figure was revised down to an increase of 0.4% from a previously reported increase of 0.7%. The major surprise came from an unexpected decline of 0.4% in core retail sales (Consensus: +0.4%, Nomura: +0.5%).”
“Consumer prices also fell short of our expectations, with headline CPI declining 0.4% (Nomura: -0.3%) and core prices remaining essentially unchanged (+0.003%) in December when we had expected a decent increase of 0.2% (0.18%). Core goods prices marked a decline of 0.3% on lower apparel (-1.2%) and used car prices (-1.2%) while core services slowed to 0.1% primarily due to a 5.0% decline in airline fares.”
“There is some evidence that momentum is slowing. For instance, in addition to the weak December retail sales, the Philly Fed index dropped sharply in January, pointing to a slowdown in manufacturing activity.”
“Our Q4 GDP tracking estimate ended the week at 3.4%, well below the strong Q3 growth rate of 5.0% but still a solid pace of economic growth. Moreover, financial conditions, broadly speaking, remain supportive for growth. Nevertheless, further deterioration of business sentiment and tighter financial conditions could raise the downside risks to our outlook.”