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Retail Sales & NY Manf. Survey Better Than Expected; PPI Higher than Anticipated

September 15th, 2009 Michael McDonough

August’s Retail Sales rose 2.7%, compared to a consensus forecast of +2.0% and a previous reading in July of -0.1%.  The ex-autos component of retail sales  came in at 1.1%, versus a consensus forecast of +0.4% and a previous reading of -0.6% in July.  Therefore, what is typically a bump in sales due to better than anticipated back-to-school spending has been replaced to some extent by the temporaneous effects of the US government’s Cash for Clunkers program and higher gasoline prices.  Ex-autos and ex-gas us retail sales increased a more modest +0.6%.  Weakened consumer confidence stemming from a deteriorating labor market–albeit at a slower pace–coupled with consumers hesitations toward borrowing and banks unwillingness to lend should keep retail sales suppressed for some time.  However, modestly upbeat performance excluding autos and gas could be the beginning of longer-term improvements, and should be monitored closely.

September’s Empire State Manufacturing Survey came in at 18.9 compared to 12.1 in August, and a Bloomberg consensus forecast of 14.0.  This is the index’s second month in a row to finish in positive territory.  This is the highest reading for the index since Nov. 2007.  Look at the details, new orders rose to +19.84 from +13.43 in August, prices paid jumped to +20.24 from +13.83, and the 6-month outlook index finished at +52.29 from +48.22.  Positive performance in the news orders index should help  to sustain upward momentum in future releases.  There was however some weakness in the shipments index, which fell to 5.3 from 14.1 in August.

August’s PPI rose by +1.7%, versus a consensus forecast of +0.8%, while the Core-PPI rose by +0.2%, compared to a consensus forecast of +0.1%

Overall markets are reacting positively to the news with equities showing some gains in pre-market trading, and treasuries falling on the back of the pricing and sales news.

Retail Sales By Group:

Group Aug-09 Jul-09 Aug (y/y)
Retail & food services 2.7% -0.2% -5.3%
(excl. motor vehicle & parts) 1.1% -0.5% -6.2%
Retail 3.0% -0.2% -6.0%
Motor vehicle & parts dealers 10.6% 1.5% -1.0%
Furniture & home furn. Stores -1.6% -0.9% -12.8%
Electronics & appliance stores 1.1% -1.0% -10.4%
Building mat,garden eq., & supplies dlr. -1.2% -1.8% -13.6%
Food & beverage stores 0.5% -0.3% -1.1%
Health & personal care stores 0.4% -0.4% 2.9%
Gasoline stations 5.1% -1.5% -26.7%
Clothing & clothing accessories stores 2.4% 0.2% -5.1%
Sporting goods, hobby, book & music stores 2.3% -0.6% -0.4%
General merchandise stores 1.6% -0.3% -0.7%
Miscellaneous store retailers 0.2% 0.1% -3.3%
Nonstore retailers 0.1% 0.0% -2.6%
Food services & drinking places 0.3% -0.2% 0.7%

Empire State Manf. Survey Diffusion Indices:

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