CHIN MUSIC: APRIL RETAIL SALES

Headline Retail sales grew +0.1% sequentially while the Control Group measure (GDP input) declined -0.1% sequentially with electronics spending and the e-sales and dining-out proxies each decelerating on a MoM, YoY and 2Y basis. 

CHIN MUSIC:  APRIL RETAIL SALES - RS Control Group 

The positive revision to the march data will help drag 1Q GDP back to positive territory but the early read through for reported 2Q growth is less sanguine – particularly in the context of consensus estimates  which have increased ~20% over the last month to +3.3%.  

CHIN MUSIC:  APRIL RETAIL SALES - COD 

Meanwhile, sales-to-Inventory ratio’s continue to peak despite the spread between nominal spending and nominal earnings growth re-expanding in recent months. 

With wage growth running sub-2% and savings rates at a cycle low (& the very low end of the historical range) the upside to consumption growth over the immediate/intermediate term remains very much constrained, in our view. 

CHIN MUSIC:  APRIL RETAIL SALES - Nominal PCE vs Nominal Earnings April 051314

CHIN MUSIC:  APRIL RETAIL SALES - Savings Rate

CHIN MUSIC:  APRIL RETAIL SALES - IS ratio 

In short, with the ~24% of the domestic economy that is retail sales off to an inauspicious start, consumption has some significant hay to bale in order to best rising consensus growth expectations and re-capture last year’s slope of growth.

With the dollar and 10Y broken and food/energy/housing inflation taking down a greater share of wallet, we're not convinced that consumption acceleration materializes.  

CHIN MUSIC:  APRIL RETAIL SALES - Retails Sales Then vs Now

CHIN MUSIC:  APRIL RETAIL SALES - Retail Sales table

Christian B. Drake

@HedgeyeUSA