U.S. ECONOMICS: Deutsche Bank Previews Tuesday's Retail Sales
In Deutsche Bank's view, December retail sales data are the most important figures of the week because they provide us with useful information on the health of the consumer, which is the "dominant driver" of private domestic demand. It notes that retail sales capture roughly 25% of total consumer spending or about 18% of overall GDP. Deutsche Bank is anticipating soft headline retail sales because of weakness in unit motor vehicle sales, they were down -6.2% last month to 15.4 million units, the largest monthly drop since May 2011. However, chain-store sales grew a modest +2.5%, which was up from +1.1% in November and represented the biggest gain since July 2013 (+3.1%). Consequently, we should see a modest increase in retail sales excluding autos and gasoline, it says. "As always, be mindful of revisions. In our forecast for 4% Q4 real GDP, we are assuming that December inflation-adjusted consumption falls. Hence, we would need to see a much weaker than expected December retail sales report for us to lower our 4% GDP estimate. Inventory building remains the wildcard for Q4, which is why the business inventory figures warrant attention."
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