US: More signals about a recovery in consumption - Wells Fargo

According to analysts from Wells Fargo, today’s retail sales data signals that the recovery in consumption seems to have started at the end of Q1.

Key Quotes:

“Retail sales were in line with market expectations in April, increasing 0.3 percent. However, March’s originally reported increase of 0.6 percent was revised upward to 0.8 percent. The details of the March revision were also strong, with retail sales excluding autos up 0.4 percent instead of 0.2 percent in March.”

“Control group sales, which is the part of retail sales that is used to calculate GDP, was relatively strong in April, up 0.4 percent, while it was upwardly revised from 0.4 percent to 0.5 percent in March. Both results point to a recovery in economic activity at the end of Q1 and at the beginning of Q2. Still, there is some noise from the recent increase in oil and gasoline prices, which will probably bring down the real retail sales numbers.”

“The Department of Commerce indicated in the release that it will release a revision to monthly retail sales estimates on May 25, 2018. This estimate will include a new sample, new seasonal factors as well as the results of the 2016 Annual Retail Trade Survey. Thus, we will be looking closely at the seasonal factors as these could make a big difference in the revision to Q1 personal consumption expenditures (PCE) estimates.”

“For now, the picture for the start of the second quarter is much better than the one we saw at the start of Q1, even with the old seasonal factors.”