US retail sales for April were weak. Control retail sales (excluding gasoline, autos, building materials and food) were flat and sales excluding autos and gasoline were up only 0.2% m/m. Headline retail sales were also flat, with gasoline sales down 0.7% m/m and auto sales down 0.4%. There were revisions to the control group of +0.2pp for March, -0.15pp for February, +0.12pp for January and -0.08 for December. Net, this leaves Q1 private consumption poised for a marginal upward revision to 2.0% q/q AR, from 1.9%. More important though is the momentum into this quarter, which is not impressive. Given today’s retail sales data, real personal consumption estimated was up only 0.05% m/m in April and, even with a rebound in the coming months, it will be difficult to get Q2 consumption growth above 3.0% q/q AR. Real incomes have been grew at a 4.0% q/q AR pace in Q1 but real personal spending increased by only 2.0%, pushing the savings rate higher. Consumer sentiment remains high, job growth has held up and labour market indicators generally suggest that job growth continued at a decent pace in May. “The current pace of consumption growth is too low in our view and thus we continue to expect a rebound”, said Danske Bank in a report on Thursday.
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