US: March retail sales show some signs of recovery after a slow start in 2017 – Nomura

The research team at Nomura notes that the total retail sales of US fell by 0.2% in March (Nomura: -0.3%, Consensus: -0.1%), driven by weak sales at auto and parts dealers and gasoline service stations.

Key Quotes

“Core (“control”) retail sales (excluding food services, auto parts, gasoline and building material sales) rose strongly by 0.5% m-o-m (Nomura and Consensus: 0.3%). However, the level of core retail sales was revised down in January and February. Core retail sales growth in February was lowered notably by 0.3pp to -0.2% (previously reported as 0.1%). Sales in January were also lowered by 0.1pp to 0.7% (previously reported as 0.8%).”

“Overall, the March retail sales report highlights sluggish growth in consumer spending despite heightened optimism. Since the election in November, consumer sentiment has hovered around historically high levels. In particular, the Conference Board’s consumer confidence index reached 125.6, its highest level since December 2000. However, there has not been material acceleration in spending.”

“On a quarterly annualized basis, core retail sales growth increased to 4.1% in Q1 from 3.8% in Q4. Also, downward revisions to core retail sales through January and February suggest nominal consumer spending in Q1 was weaker than we estimated. Our Q1 GDP tracking estimate, which has been hovering below 1% for a while, currently stands at 0.9%, up 0.1pp from our previous estimate. This estimate incorporates March core CPI inflation, which surprised on the downside. Adjusted for inflation, core retail sales were slightly stronger in March than we had expected.”