U.S. ECONOMICS: Tuesday Economic Sales and Trade Prices Wrap
Tuesday's U.S. reports revealed a weak round of retail sales figures for April, though it followed upward Q1 revisions that left only a modest shortfall in the sales trajectory. We also saw a weaker-than-expected round of retail inventories in the business inventory report for March, and the April trade price report undershot expectations as well, with weakness in non-agricultural export prices and petroleum import prices. The mix implies a downward Q1 GDP growth to minus 0.2% from the previously reported 0.1%, though we still assume 3.2% GDP growth in Q2.
The 0.1% April retail sales headline gain with a flat ex-auto figure undershot assumptions, but it followed upward Q1 revisions that left a report that was only slightly disappointing.
April weakness reflected a smaller-than-expected lift from gasoline and building materials, which rose 0.8% and 0.4% respectively, though auto sales boosted the headline with a 0.6% gain. Upward prior revisions reflected boosts for autos and nondurables in February and March.
For sales excluding autos, gasoline, and building materials, which guide the real consumption component of GDP, we saw a 0.2% April drop, but prior gains of 1.4% (was 0.9%) in March, and 0.6% (was 0.5%) in February, following a big 0.9% January decline.
Business inventories showed the inventory-to-sales ratio slipped to 1.30 in March and February (was 1.31) from 1.31 in January, versus 1.28-1.29 over the eight months ending in December, as the ratio fluctuates at the high-end of the narrow 1.27-1.31 range otherwise evident since March of 2012.
Agricultural export prices rose by 1.4% in April alongside a 3.6% Ag-price surge, following respective March gains of 2.8% (was 2.7%) and 4.7%, February gains of 1.4% and 7.1%, but January declines of 0.1% and 1.0%.
Petroleum import prices fell 0.7% in April despite a 1.6% March WTI rise. Petroleum import prices have more generally undershot WTI prices over the past twelve months, given a small net rise in petroleum import prices of just 0.1% despite an 11.0% twelve-month WTI price rise.
For 2014 overall, export prices ex-agriculture and import prices ex-petroleum are showing a modest firming path, with respective year-to-date gains of 0.6% and 0.9%. This follows respective 2013 declines of 0.3% and 1.2%, near-zero figures of -0.3% and 0.1% in 2012, and declines for both in Q4 of 2011. We saw big average respective monthly gains over the twenty-six months before that of 0.5% and 0.3%
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