US Retail Sales Revised Sharply Downward
$DIA, $SPY, $QQQ, $VXX
US retail sales saw a sharp downward revision to January’s sales causing concerns about the economy’s growth prospects.
Tuesday’s weak report from the US Commerce Department bucked the trend of recent labor market data that had suggested the economy is on solid ground despite some concerns that a recession was looming. Morgan Stanley puts a 30% chance of a global recession in the cards.
Retail sales dipped 0.1% last month as automobile purchases fell and cheaper gasoline undercut receipts at service stations.
January’s retail sales were revised down to show a 0.4% decline instead of the previously reported 0.2% increase, that is a big number.
Retail sales excluding automobiles, gasoline, building materials and food services were unchanged after a downwardly revised 0.2% increase in January.
These core retail sales correspond most closely with the consumer spending component of GDP (gross domestic product) and were previously reported by the government to have risen 0.6% in January.
Economists polled had forecast retail sales slipping 0.2% and core retail sales rising 0.2% in February.
Last month’s weak core retail sales reading, together with January’s modest gain, suggest that consumer spending will probably remain lukewarm in Q-1 after growing at a 2.0% annualized rate in Q-4.
Prices for US government debt rose after the data, while the dollar fell against the Euro and Yen. US stock index futures were trading lower.
The report came as Fed officials prepared to gather for a two-day policy meeting. The US central bank is expected to leave interest rates unchanged as policymakers monitor developments on global financial markets, domestic inflation and the labor market.
The Fed hiked its benchmark overnight interest rate in December for the 1st time in nearly a decade.
In a separate report, the Labor Department said its producer price index dropped 0.2% last month on lower energy and food costs, after edging up 0.1% in January.
In the 12 months through February, the PPI was unchanged after falling 0.2 percent in the year through January. It was the first time since January 2015 that the Y-Y PPI did not decline.
With the USD losing some momentum after gaining 20% against the currencies of the United States’ main trading partners between June 2014 and December 2015, imported deflation is starting to wane. That could curb further declines in producer prices.
But Crude Oil prices, which tumbled by as much as 4% Monday on concerns that a 6-week market recovery has gone beyond the fundamentals, remain a wild card. So far this year, the USD has gained about 0.9% on a trade-weighted basis.
A 4.4% drop in the value of sales at service stations weighed on retail sales last month. Gasoline prices dropped 9 percent in February, according to the US Energy Information Administration (EIA), as Crude Oil prices fell further.
Retail sales were also hurt by a 0.2% fall in sales at auto dealerships and a 0.5% drop in receipts at furniture stores. Auto sales declined 0.2% in January.
Receipts at electronics and appliance stores slipped 0.1%. But there were pockets of strength, with clothing store sales rising 0.9% last month and receipts at building materials and garden equipment stores gaining 1.6%.
Sales at sporting goods and hobby stores rose 1.2% and sales at restaurants and bars increased 1.0%. Online store sales dropped 0.2%.
Tuesday, US major stock market indexes finished mixed at: DJIA +22.40 at 17251.53, NAS Comp -21.61 at 4728.66, S&P 500 -3.71 at 2015.93
Volume: Trade was light with less than 810-M/shares changing hands on the NYSE.
- Russell 2000 -6.1% YTD
- NAS Comp -5.6% YTD
- S&P 500 -1.4% YTD
- DJIA -1.0% YTD
HeffX-LTN Analysts position on: DIA, SPY and QQQ is Neutral.
Stay tuned…
Paul Ebeling
HeffX-LTN
The post US Retail Sales Revised Sharply Downward appeared first on Live Trading News.