Friday, December 14, 2018
A week and a half before Christmas Day, we remain in the heart of holiday shopping season. This points directly to the business of retailers, and new Retail Sales numbers have come in this morning. So while we’re already mindful that these companies are looking toward their own bottom lines, we can see new results for the month of November: +0.2% on the headline beat the +0.1% expected, with October having been upwardly revised from +0.8% in the last read to +1.1% in today’s latest one.
Looking under the hood a moment, we strip out automobile sales, which are high ticket price items and can distort the data month over month. Here we also see +0.2%, exactly in-line with expectations. The revision to October was also favorable: +1.0% from the +0.7% originally reported. Ex-autos & gas, pulling out even more volatile pricing, we see an even more pleasing jump, to +0.5%. Control ratcheted up half a full percentage point from expectations to +0.9%, with the October revision rising from +0.3% to +0.7%.
These are welcome news for the Retail industry in this, it’s “most wonderful time of the year.” Especially when we’re beginning to see things like pullbacks in business investment weighing down economic growth in the U.S., it’s pleasing to know the consumer is doing his or her part. And this carries added importance today, when we see Retail numbers for China missing expectations, helping send Asian markets lower overnight.
Chinese Industrial Output also came up short in its latest read, and as a result we saw the Hang Seng (Hong Kong stock market) lose 2% in its Friday trading. This has had a detrimental effect on pre-market futures here at home, with the Dow -200 points, the Nasdaq -60 and the S&P 500 -20. Today’s Retail Sales figures have provided a subtle boost to the lower projected open, but the trade war affecting the Chinese economy is holding the headlines for the moment.
Finally, Industrial Production and Capacity Utilization numbers have also just been released ahead of the Friday opening bell, with more good news on this front: +0.6% growth in Industrial Production outperforms the 0.4% analysts had been expecting, and well above the +0.1% in the last read. Capacity Utilization, at 78.5%, came in right about in-line with estimates (78.6%) and last month’s read (78.4%). This is still just below the threshold known to put pressure on prices — meaning more good news.
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