Retail Sales And Empire: A Mixed Bag

by: Karl Denninger

One word: Meh.

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $411.1 billion, an increase of 0.8 percent (±0.5%) from the previous month and 6.5 percent (±0.7%) above March 2011. Total sales for the January through March 2012 period were up 6.4 percent (±0.5%) from the same period a year ago. The January to February 2012 percent change was revised from 1.1 percent (±0.5) to 1.0 percent (±0.2%).

That doesn't look so bad.

In the unadjusted numbers, however, we see a few big movers where you don't want them, especially gasoline.

But there really wasn't a bad number in the series when you get down to the unadjusted numbers. Whether this represents anything durable is an open question, and if we don't get some relief on the gas price problem soon, it won't be.

Empire is another matter.

April's Empire State Manufacturing Survey indicates that manufacturing activity in New York State improved modestly. Although the general business conditions index fell fourteen points, it remained positive at 6.6. The new orders and shipments indexes also remained positive, but showed only a small increase in orders and shipments. The prices paid index inched downward but remained high, and the prices received index climbed six points to 19.3. The index for number of employees rose to its highest level in nearly a year, indicating a significant increase in employment levels, while the average workweek index fell to a level that indicated only a small increase in hours worked. Future indexes remained quite positive, suggesting a strong and persistent degree of optimism about the six-month outlook.

We'll see about that on the optimism side.

The biggest problem in the index this month was unfilled orders which were negative and shipments which are now in a two-month downtrend from a relatively high level. Prices paid and received narrowed a bit, which is positive, but workweek was almost flat, which is consistent with the unfilled order and shipment changes.

On the forward expectations side the biggest surprise is on that of prices paid. That one's simple: Not unless oil prices come in materially.

Your entire thesis on an "improving picture" rests there and I simply don't see it happening on that basis any time soon.