US: May retail sales highlight strong consumer outlook – Nomura

By | June 15, 2018

Analysts at Nomura note that US total retail sales rose 0.8% m-o-m in the May advance retail sales report, above expectations (Nomura: 0.5%, Consensus: 0.4%) as the upside surprise was driven by a strong increase in sales at building materials and gasoline stations.

Key Quotes

“Core (“control”) retail sales were up strongly by 0.5%, in line with our expectation but slightly above market consensus (Nomura: 0.5%, Consensus: 0.4%). In addition to May’s strong reading, core retail sales were revised up in both April and March by about 0.1pp, respectively.”

“The strength in retail sales report for May continues a string of positive data for the US economy, indicating some acceleration in momentum during Q2.”

“Yesterday’s report appears consistent with a rebound in Q2 personal spending. The labor market has remained very healthy. Together with the recent tax cuts, the strong labor market will likely remain as a tailwind for consumer spending this year.”

GDP tracking update: May core retail sales were in line with our expectation while sales in April were revised up, implying healthy growth in personal spending in Q2. Our Q2 real GDP tracking estimate is unchanged at 4.1% q-o-q saar after rounding. The upward revisions to core retail sales in March were positive to Q1 personal spending but the Quarterly Services Survey for Q1, released last week, suggests less spending on services during the quarter. Thus, we lowered our Q1 real GDP tracking estimate by 0.1pp to 2.4% q-o-q saar.”

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