• January sales expected to return to trend
  • December revisions key market focus
  • Private sector records show good holiday sales

The US Census Bureau will issue its retail sales report for January on Monday March 11th at 8:30 am EST, 13:30 GMT.

Forecast

Retail sales are predicted to increase to 0.1% in January following December’s large but likely incomplete drop of 1.2%. Sales without automobiles are expected to rise 0.3% after the 1.8% plunge in December. The control group which is used by the Bureau of Economic Analysis to calculate GDP and excludes building material, motor vehicles gasoline station and foods service receipts, is expected to gain 0.6%. It fell 1.7% in December.

December Revisions: Revived optimism

Revisions to prior months’ statistics are normally a minor affair.  This release is different.  December is biggest month of the year for American retailers, many depend on holiday sales for much of their annual profit.  As we noted in our preview for US fourth quarter GDP on February 27th .

“The month long partial government shutdown in late December and January may have had an uncertain effect on the US economic activity but it had a decided effect on the reporting of that growth.  The most important impact seems to have been on the retail sales numbers from the US Census Bureau a division of the Commerce Department.”

Expectations before the delayed December retail sales release on February 14th were for a continuation of the healthy expansion rates from October and November.  Overall sales were expected to rise 0.2% in December following the prior gains of 1.0% and 0.1%.  Sales excluding autos were forecast to rise 0.1% after October’s 0.8% increase and November’s flat result. The control group, the Bureau of Economic Analysis’  category for consumer spending, that is sales excluding building materials, motor vehicles and parts, and gasoline station and food service receipts, was predicted to increase 0.4% after October’s 0.3% and November's 1.0% gains.

There were good indications from the private sector that the December holiday shopping season had been a success.  

Amazon the world’s largest on-line retail business had reported record sales for the season. The Redbook Index which tracks weekly proceeds from stores representing 80% of the Commerce Department’s retail base tabulated a 6% rise each week in December in same store sales. The 9.3% increase of annual sales in the last week of the month was the largest in its history.  MasterCard said it had a 5.1% increase in card purchases over 2017.

In the statement accompanying the release the Commerce Department included the anodyne note, "data collection and processing were delayed" leaving the interpretation as to how this might have affected the numbers entirely to the reader.

The retail sales numbers as issued were far below expectations and in complete contradiction to the figures from private sources.

Headline sales came in at -1.2%, 0.2% forecast.  Sales ex-autos were -1.8%, forecast 0.1%.  The control group was -1.7% with a predictions of 0.4%.

Reuters

To give a sense of how far out of line the Census numbers were the headline drop of 1.2% was the worst single month since sales fell 2.4% in September 2009. Sales-ex autos at -1.8% saw their worst month since December 2008, -2.6% at the height of the financial crisis.  The control group number -1.7% was the largest one month fall since September 2001, worse even than September 2008, -1.6%, and March 2009 -1.5%. 

Reuters

The disconnect between the private sector accounts of the Christmas season and the Census figures was noted by many commentators. One final note, Amazon’s report of record sales directly denys the government statistic that non-store sales fell nearly 3.9% in the month.

If the December figures from Census are accurate then it will be surprising if the January numbers return to trend. We will have to formulate a new theory as to why retail sales would collapse in the midst of a jobs boom. If the numbers are incorrect the view ahead for the US economy is considerably brighter.

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

Australian Dollar extends gains despite  mixed PMI

Australian Dollar extends gains despite mixed PMI

The Australian Dollar (AUD) continues to strengthen against the US Dollar (USD) following the release of mixed Judo Bank Purchasing Managers' Index (PMI) data from Australia on Friday. The AUD also benefits from a hawkish outlook by the Reserve Bank of Australia (RBA) regarding future interest rate decisions. 

AUD/USD News
Japanese Yen fails to build on stronger CPI-led intraday uptick against USD

Japanese Yen fails to build on stronger CPI-led intraday uptick against USD

The Japanese Yen (JPY) attracted some follow-through buying for the second successive day following the release of slightly higher-than-expected consumer inflation figures from Japan. This comes on top of Thursday's hawkish remarks from BoJ Governor Kazuo Ueda, which keeps expectations for a December interest rate hike in play.

USD/JPY News
Gold price advances to near two-week top on geopolitical risks

Gold price advances to near two-week top on geopolitical risks

Gold price touched nearly a two-week high during the Asian session as the worsening Russia-Ukraine conflict benefited traditional safe-haven assets. The weekly uptrend seems unaffected by bets for less aggressive Fed policy easing, sustained USD buying and the prevalent risk-on environment

Gold News
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally

Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally

Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time. 

Read more
A new horizon: The economic outlook in a new leadership and policy era

A new horizon: The economic outlook in a new leadership and policy era

The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Majors

Cryptocurrencies

Signatures