After October’s big upside surprise print, US retail sales are expected to slow their roll a little – but still rise for the 3rd straight month (and BofA is in line with consensus). Analysts were right on direction but significantly wrong on amplitude as headline retail sales rose just 0.3% MoM (well below the +0.8% MoM expected)…
Source: Bloomberg
Core retail sales also missed (ex-autos and ex-autos-and-gas).
The softer-than-expected report may reflect the pulling forward of holiday sales as many Americans, aware of supply-chain slowdowns, shopped earlier than usual. Or, as Bank of America noted last week, consumers have started to react to the Omicron variant.
Total airlines spending slipped noticeably to -15% on a 2 year basis, down 13% from the prior week. The weakness seems to be driven by cancellations of international trips: indeed, BofA found a meaningful pick up in refunds from non-US carriers and little change in refunds from domestic carriers.
Most notably, Retail Sales ‘Control Group’ – the data that feeds into GDP – actually shrank 0.1% MoM (massively missing the +0.7% expected)
Finally, remember that retail sales are reported on a nominal basis and thus it is unclear how much of the rise is simply sue to inflation. The chart below – while overly simplistic given the vastly different weighting schemes – attempts to adjust retail sales monthly change for the shift in CPI. The picture is quite different, as ‘adjusted for inflation’, retail sales dropped in November…
Source: Bloomberg
Will today’s print be considered in today’s Fed decision?
