US November retail sales preview

U.S. retail sales statistics for November will be released at 13:30 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 account for only $1.4 trillion. Buying of non-durables such as food, clothing account 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 and expenditure have been growing in last few years. Fed has repeatedly said that personal income growth is 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. But in July, retail sales didn’t grow at all and excluding autos, it was down by 0.3 percent. In September it grew by 0.6 percent but declined by 0.3 percent in August. Retail sales growth was robust in October growing 0.8 percent excluding autos.

Expectations today –

• Today it is expected to grow by 0.3 percent and by just 0.4 percent excluding autos.

Impact –

• The focus of the market is on FOMC interest decision which will be announced at 19:00 GMT. So the retail sales data unlikely to be a major market mover but it would definitely set the mood heading into FOMC. A better than expected numbers would lead the market expectations towards a more hawkish FOMC announcement.