Bill Diviney, Senior Economist at ABN AMRO, points out that the US September headline retail sales printed below expectations at 0.1% mom (consensus: 0.6%), although the core ‘control group’ – which is a better indicator for GDP growth – was notably stronger, at 0.5% mom.
Key Quotes
“Core nominal retail sales grew 4.7% annualised in Q3, which suggests PCE grew c.3.0% – in line with what we had forecast for the quarter. While this is down on the 3.8% PCE growth in Q2, it is still well above potential, reflecting elevated consumer confidence, continued rises in employment, and gradually firming wage growth.”
“Looking ahead, consumption is likely to cool further to something resembling potential. Thereafter, we expect a slowdown in investment growth, with higher government spending picking up some of the slack in GDP growth in 2019.”
“Overall, we expect growth momentum to remain strong for the remainder of the year, but it is currently peaking – if it has not done so already – and will slow considerably into 2019, dropping below potential by the end of the year. Our annual growth forecasts remain at 3.0% for 2018, and 2.7% for 2019.”
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