US Retail Sales

Retail Sales:-2.8%
Ex Auto Retail Sales:-2.2%
Revisions:Not much change

=========================================
                                        Oct.   Sept.
                                       2008    2008
=========================================
                                        -------------
Retail & food service          -2.8%   -1.3%
 Ex-autos                         -2.2%   -0.5%
 Ex-gas                            -1.5%   -1.4%
 Ex-autos & build mat.       -2.4%   -0.6%
 Ex-autos & gas                 -0.5%   -0.6%
 Ex-food service                 -3.1%   -1.5%
 Ex-build mat., auto dlrs     -2.3%   -0.5%
 Ex-gas, bldg mat, dlrs(*)   -0.5%   -0.6%

Details within  categories shows declines across most sectors:

The market is expecting the worst for the Retail Sales.  The consumer was said to have disappeared in October as employment, housing, declining stock market, and credit turmoil all converged at once.  The expectation is for a decline of 2.1% and -1.2% for the core autos.  The headline figure will be the 4th decline in a row and if comes in as expected would be the largest decline since November 2001. However, that decline was off a 6.6% gain the month before. 

The wonder is how the currencies will react. A weak number like this should cause dollar selling.  However, it should also pressure the stock market.  The pattern has been if the stocks decline, the dollar rallies against the EUR. GBP and CHF sells against the Yen.  The reaction will be key for the market today as we head into the weekend. 

US Retail Sales will be released at 8:30 AM EDT.  The expectation is for a decline of 0.7% and ex auto -0.2%. 

Looking at the details of the Retail Sales from a year ago (see chart below), the bright spot has been Gasoline sales, Food and Beverage and Eating and Drinking - the three areas that benefitted from higher prices in 2008.  Other areas are showing small or negative growth led by Vehicle and Parts.  There is little in the way of strength in the make up of the figures and expectation going forward would be further weekness going forward into the holiday season.

Ex autos +0.1% and previous month revised to -0.1% from -0.2%.  All are better than expectations.  However, analysts are warning about the the effects of gas on the release and adjusted for inflation, spending is down more.  Ex Gas, the sales were 0.0% gain.  So the higher gas prices are boosting retail sales. 

At 8:30 AM on Monday the US Retail Sales data for March will be released.  Last month retail sales fell 0.6%.  Ex Auto the figure came in at -0.2%.  The last three months of retail sales have had a decline of 0.7% a gain of 0.4% and a decline of 0.6.  Clearly, the US consumer is slowing their spending. 

The US will release its first main economic report at 8:30 when the January Retail Sales report is released.  Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on US GDP.   Consumer purchases represent 2/3 of the nations GDP. 

The US Retail Sales data will be released today at 8:30ET.  Expectations are for an unchanged reading with the core reading also showing an unchanged value.  Last months figure came in at a surprisingly strong 1.2% for the headline and +1.8% for the core.  This month the story is different as heavy discounting was prevalent.  Note also, that the recent employment report showed a decline of 24,000 jobs indicating weakness in the retail sector.  We will see if the weak retail employment flows through to this report.