US: Top-line retail sales to have fallen 0.2% - Nomura

The research team at Nomura expects US top-line retail sales to have fallen 0.2% m-o-m (Consensus: 0.0%) in May.

Key Quotes

 “Top-line retail sales increased 0.4% m-o-m April. Core (“control”) retail sales (excluding autos, gasoline, building material and food services), an important component in estimating real growth in personal consumption expenditure, increased steadily in recent month. Incoming data suggest continued growth in core retail sales in May. Although ISM nonmanufacturing index declined slightly in May, it still remained at a highly elevated reading of 60.7 pointing to resilient optimism. The employment in core retail sector has been soft, declining 0.1% in May after remaining flat in April. However, given healthy consumer fundamentals such as firm job gains and income growth, we think core retail sales continued to improve. Thus, we forecast a steady 0.2% m-o-m increase in core retail sales (Consensus: +0.3%).”

“For non-core components, we expect a sharp slowdown in sales at gasoline stations as domestic gasoline prices plunged in May after a solid gain in April. Despite OPEC’s effort to buoy oil prices, increases in domestic oil production may have allayed upward pressure on prices. Moreover, we expect a sharp decline in sales at motor vehicle and parts dealers as suggested by sluggish consumer light vehicle sales in May. Total light vehicle sales came in below expectation at an annualized pace of 16.6mn units, much lower than a 2016 average of 17.5mn units. Excluding auto sales, we forecast a 0.2% mo-m decline (Consensus: +0.1%). Altogether, we expect top-line retail sales to have fallen 0.2% m-o-m (Consensus: 0.0%).”