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Friday, May 11, 2018

Merrill: "Retail spending stalls again"

by Calculated Risk on 5/11/2018 09:25:00 AM

A few excerpts from a Merrill Lynch research note: Retail spending stalls again

According to BAC aggregated credit and debit card data, retail sales ex-autos declined 0.1% mom seasonally adjusted in April. This suggests that the better momentum in consumer spending seen in March failed to carry over to start the second quarter. We saw two headwinds for the consumer in April: weather and higher gasoline prices.

We find evidence that unseasonably cold weather conditions likely played a role in holding back consumer activity. Specifically, the Midwest and the Northeast experienced below average temperatures ...

Higher gasoline prices also likely dampened overall consumer spending. According to the Energy Information Administration, retail gasoline prices jumped 6.4% mom in April as crude oil prices rose on negative supply shock and solid global demand. This led to a surge in spend at gasoline stations and a shift away from other categories. ...
Bottom line: Retail spending softened in April. The weather impact should prove temporary but rising gasoline prices is likely to persist, eating away some of the positive impact from higher after-tax wages seen post tax reform.
CR Note: Retail sales for April are scheduled to be released on Tuesday, May 15th. The consensus is retail sales increased 0.3% in April.