FXStreet (Barcelona) – Reviewing the US retail sales data result for May, James Knightley, Senior Economist at ING, notes that details suggest the consumer psyche of saving rather than spending continued, but September looks likely for a rate hike.
Key Quotes
“US retail sales for May have rebounded after the weather depressed readings seen in recent months. They rose 1.2%MoM, in line with market expectations while April was revised up to +0.2%MoM from 0.0 and March is now reported as +1.5% versus +1.1% previously. This shows a marked improvement in consumer spending on the December-February period where we saw three consecutive contractions.”
“Motor vehicles were particularly strong, rising 2%MoM and building material saw sales rise 2.1% and gasoline station sales rose 3.7%. Nonetheless, even if we strip out these volatile components, the so called “control” group (which tends to better match the pattern in broader consumer spending), shows that spending was strong. This core measure of retail sales rose 0.7%MoM versus the 0.5% consensus and again there were upward revisions to the past couple of months’ data.”
“Consequently, this report backs up the assumption that we didn’t see a change in consumer psyche – that of saving rather than spending. Indeed, it is pretty clear that the weakness at the start of the year was weather related. This view is backed up by the rebound in housing activity and the decent payrolls number for April. As such it should give markets greater visibility on the likely path of Fed policy with September looking likely for the start of the tightening cycle.”
(Market News Provided by FXstreet)