The markets are looking for robust US retail sales growth in December but they shouldn't be. Auto sales slumped by 5% in December, payback from Black Friday that shifted purchases forward into November and left retailers wondering what's the point? Odds can only be that broader sales suffer the same or at least similar fate.
December over November, consensus expects a 0.3% expansion, but that seems most unlikely after the 0.6% surge in November. If sales manage merely not to fall, we'd call that a victory. That would leave on-year sales growth at 2.9%; treading water essentially. Knock off a point and a half for inflation and real growth is stumbling along at a 1.5% YoY pace - not much of a poster for the Fed's lift-off plans.
"Our best guess for overall consumption growth in the fourth quarter remains at 1.8% (QoQ, saar). We reckon this, combined with near-zero investment growth, will result in GDP growth of only 1.4% in the fourth quarter, down from 2% in the third quarter and 3.9% in the second. The growth is expected to remain at 1.5% or less in early-2016, Fed plans for normalization would likely be put on hold. At the moment, we'd put the odds of this occurring at around 40% and continue to look for 4 more hikes by year-end - not because the data will oblige them but because officials believe they will in time.", says DBS Group Research.
