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This does not look good for the US. Expect some “recession talk”. Retail sales dropped 0.3%, contrary to a rise of 0.1% expected. A small upwards revision for February is not enough to compensate. Core sales rose only 0.2% and the control group only 0.1% – both are misses of 0.2% with only modest upwards revisions. PPI isn’t too good either.

The USD is retreating with EUR/USD bouncing off the lows, USD/JPY ticking a bit lower and GBP/USD remaining  somewhat depressed.

The US was expected to report a rise in retail sales  in March, the last month of Q1 and a figure eyed  by some as a key to the danger of a recession in the US.

The greenback was looking better against majors, with EUR/USD finally breaking out of range. Also USD/JPY was on the move but commodity currencies seemed more resilient.

Retail sales and PPI data

  • Core PPI m/m was flat last time and it was expected to rise 0.1% this time. Actual: -0.1%.
  • PPI y/y: prev. 0%, exp. +0.3%, actual: -0.1%.
  • Core PPI y/y: prev. 1.2%, exp. 1.3%, actual: 1%
  • Retail sales m/m: prev. -0.1%, exp. +0.1%, actual: -0.3%
  • Core retail sales, prev. -0.1%, exp. +0.4%, actual: +0.2%.
  • Retail sales control group: prev. 0%, exp. +0.3%, actual: +0.1%.
  • Retail ex gas/autos: prev. +0.3%, actual: +0.1%.

Revisions are worth +0.1% to the retail sales number, core sales and the control group. The ex gas/ex auto figure is revised +0.3% to the upside, but this is not enough.

We will later hear from the Atlanta Fed and various commercial banks. They will surely have revised GDP figures that will teeter on the verge of a contraction in Q1, a first quarter that hasn’t seen a severe storm.

Retail sales background

The US economy is  mostly about consumption, making this a top tier figure.  In 2015, retail sales disappointed in most occasions, contributing to the delay in the rate hike and frustrating many with the slow growth. In 2016, the year began with a bang: a big rise reported for January in February ended the  gloom and doom that was prevalent at the time.

But, these figures were revised to the downside in March, with the February report also missing expectations. In addition, other data for Q1 wasn’t that great. The various GDP forecasts published by the Fed and commercial banks talk about very poor growth: around 0.4% to 0.6% annualized, which would be 0.1%  q/q.

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