U.S. retail sales likely to have eased in July
Source: FxWire Pro - Commentary / 14 Aug 2018 17:22:08 America/New_York
U.S. retail sales are likely to have eased in July. In the prior month, retail sales had risen 0.5 percent, while May’s gain was upwardly revised to a solid 1.3 percent. Control group sales had remained flat on the month, which was not too concerning given the upward revisions to prior months. These retail sales figures are in line with the 4 percent annualized rise in personal consumption expenditures recorded in the second quarter.
It is alluring to tie the second quarter’s big rise in consumer spending to the tax cuts; however, part of the strength reflects some catch-up from the first quarter, which was, in part, negatively impacted by harsh winter conditions. Catch-up effects, along with a subdued print in June, do not give great momentum for retail sales going into the third quarter.
“We expect some weakness to remain, and look for retail sales to rise only 0.1 percent in July. However, given a tight labor market and wage growth beginning to materialize, the current weakness in retail sales is unlikely to persist throughout the remainder of the year”, stated Wells Fargo in a research report.
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