13 Nov 2015
US: Retail Sales below expectations, but trend remains intact – Wells Fargo
FXStreet (Córdoba) - According to economists from Wells Fargo, the US retail sales report from October shows positive details despite the headline.
Key Quotes:
“Despite increasing at a lower-than-expected rate in October, this retail sales report points to continued improvement in consumer spending. Prices weighed on headline sales, but core sales are encouraging.”
“Retail sales can be notoriously volatile on a monthly basis and focusing on longer-term trends can help smooth through some of this volatility. The control group, which removes food, gasoline, building materials and auto dealers and feeds directly into the calculations for GDP, shows steady gains. The control group increased 0.2 percent in October and September’s figure was upwardly revised to a positive 0.1 percent from an initially reported decline of 0.1 percent. While there has been some deceleration in control group sales, reflected by the decline in the three month annualized rate, we believe this is largely transitory.”
“The labor market continues to improve, evidenced by October’s stellar employment report. The unemployment rate is now well within the Fed’s central tendency for full employment and this should support income growth, the key driver of consumer spending. In addition, consumers are likely now seeing the benefits of lower gas prices. This should boost real consumer spending, which we look to increase at an annualized rate of 3.4 percent in the fourth quarter.”
Key Quotes:
“Despite increasing at a lower-than-expected rate in October, this retail sales report points to continued improvement in consumer spending. Prices weighed on headline sales, but core sales are encouraging.”
“Retail sales can be notoriously volatile on a monthly basis and focusing on longer-term trends can help smooth through some of this volatility. The control group, which removes food, gasoline, building materials and auto dealers and feeds directly into the calculations for GDP, shows steady gains. The control group increased 0.2 percent in October and September’s figure was upwardly revised to a positive 0.1 percent from an initially reported decline of 0.1 percent. While there has been some deceleration in control group sales, reflected by the decline in the three month annualized rate, we believe this is largely transitory.”
“The labor market continues to improve, evidenced by October’s stellar employment report. The unemployment rate is now well within the Fed’s central tendency for full employment and this should support income growth, the key driver of consumer spending. In addition, consumers are likely now seeing the benefits of lower gas prices. This should boost real consumer spending, which we look to increase at an annualized rate of 3.4 percent in the fourth quarter.”