The US retail sales figures Friday morning were a positive surprise. The total printed at 1.3% vs. March '16 (MoM) figure of -0.3%, and a street expectation of 0.8%. It is a much better print compared to last month.
Here is a break-down of the components YoY that shows the contribution of each of the underlying components (since June 2012, seasonally adjusted data).
Compared to March, all major components were better (except food services). Compared to last year, the picture is mixed - a contraction in auto sales and food and food services offset largely by gas station spends, housing materials and e-commerce. Going forward, I expect the auto component to improve further and gasoline spending to firm up further.
It is interesting to contrast this with headline CPI numbers. Roughly speaking, the comparison is below.
|Foods and Beverages||13.5||37.2|
|health care related||8.1||6.1|
And the chart shows the recent history of component contribution. We still see signs of general price weakness. But given the improvement in the energy component of the retail sales and solid housing markets, I expect quite a good print of CPI headlines next week.
That may mean a re-pricing of Fedspeak in the next FOMC, and perhaps not much merry notes for risk assets in the short term.
All data from US Census Bureau, US Bureau of Labor Statistics and Bloomberg