U.S. July retail sales preview

U.S. retail sales statistics for July will be released at 12:30 GMT, today.

Why retail sales and U.S. consumers are important?

• Domestic consumption of goods contributes about 25% of GDP or around $ 4.3 trillion as of 2015. Among these durable goods, such as vehicles, furniture accounts for only $1.4 trillion. Buying of non-durables such as food, clothing accounts for $2.9 trillion.
   
• Moreover, services, which is not covered by retail sales account for 45% of the GDP and mainly consumed at home.

Past trends –

• Retail sales, as well as personal consumption expenditure have been growing in last few years. FOMC in its last statement called personal income growth as robust. However, expenditure has remained weak compared to income.
   
• Except for growing 0.9% in March, 1.2% in May and 0.6% in July, retail sales have remained subdued throughout 2015. In four months last year growth has been negative.
   
• Even in 2016, the numbers were very weak.  February and March were negative. However, it has somewhat bounced back since April, when it grew by 1.3 percent, followed by 0.5 percent in May and 0.6 percent in June.

Expectations today –

• Today, it is expected to grow by 0.4 percent. However, when autos excluded, it is just expected at 0.2%.

Impact –

• The dollar has been showing some strength yesterday against Euro, Pound, Aussie, Kiwi and Franc. With better data, it is likely to gain more grounds after hawkish comments from San Francisco Fed President John Williams.
• The dollar index is currently trading at 95.87, down just 0.07 percent today so far..