US DATA WRAP: Retail Sales disappoints, regional surveys top expectations, and initial jobless claims slightly falls

Analysis details (21:25)

RETAIL SALES: January Retail sales disappointed with a M/M decline of -0.8%, well beneath the -0.1% consensus, reversing the prior (revised down) +0.4%. Retail Sales ex-autos eased 0.6%, despite expectations of a 0.2% gain. The super core, ex gas and autos, eased 0.5% vs the prior 0.6% gain. The weakness in the core metrics shows that the January downside was widespread and not just related to volatile components. The data, as always, is adjusted for seasonal variation and holiday and trading-day differences but analysts have cautioned on a larger impact to January adjustments. Looking into the report, the largest weakness was seen in building supplies, falling 4.1% while miscellaneous store retailers dropped 3%. There were little sectors with upside, aside from furniture and home stores which rose 1.5% while food services and drinking places gained 0.7%. Note, although the consensus looked for a -0.1% print, analysts at Bank of America had forecast a -0.6% decline. Analysts at Oxford Economics write "Much of the decline in retail sales in January is noise, with a price-related fall in gas station sales, a large drop in auto and building materials sales attributable to weather, while weakness in non-store and general merchandise sales is payback following a strong holiday shopping season. The one bright spot in the report was a solid advance in bar and restaurant spending." The retail control print declined by 0.4%, well beneath the +0.3% print and easing from the prior downwardly revised 0.4%, which does not bode well for the start of the Q1 GDP. Oxford Economics warn the February data could also be noise due to the leap year and uncertainties of the tax refund season.

INITIAL JOBLESS CLAIMS: Initial jobless claims (w/e 10th Feb) fell to 212k from 220k (exp. 220k), on the lower bound of the forecast range, while the 4wk average rose to 218.5k from 212.75k - the 4wk average now excludes the steep drop in claims during the cold weather. Continued jobless claims (w/e 3rd Feb) lifted to 1.895mln (prev. 1.865mln, exp. 1.88mln). Note, seasonal factors had expected a decrease of 3,523 (or -1.5%). Looking ahead, Pantheon Macroeconomics says “the key leading indicators of initial claims (Challenger layoff numbers, WARN notices of mass layoffs, plant closures, and Google searches for “job cuts”), all point to a clear increase in the spring, or perhaps sooner.”

PHILLY FED: Philly Fed Business Index (Feb) printed its first positive reading since August as it surprisingly rose to 5.2 (prev. -10.6, exp. -8.0) and exceeded the -3.0 upper bound of the forecast range. Current indicators were mixed – New orders and shipments improved to -5.2 (prev. -17.9) and 10.7 (prev. -6.2), respectively, but employment fell to -10.3 (prev. -1.8), its lowest since May 2020. On prices, paid jumped to 16.6 (prev. 11.3), while received was more-or-less unchanged at 6.2 (prev. 6.3). Looking ahead, the survey’s broad indicators for future activity strengthened, suggesting more widespread expectations for growth over the next six months. Numerically, the 6m index rose back into positive territory reading 7.2 (prev. -4.0), while future new orders and shipments surged to 24.2 (prev. 9.7) and 26.7 (prev. 5.5), respectively. Capex extended to 12.7 from 7.5.

NY FED: After the NY Fed Empire survey headline slumped to -43.7 in January, the February report showed a further contraction but at a much slower pace, with the headline printing -2.4, above the forecast -15.0. New Orders continued to slow at -6.3 but not as steep as January's -49.4. Shipments saw a slight expansion at 2.8, unwinding a small portion of the prior months -31.3. Unfilled Orders continue to fall but at a slower pace than in January, inventories declined even further, however. On the labour market, the number of employees held steady, suggesting employment levels were unchanged while the average workweek saw a small decline. On prices, Prices Paid accelerated to 33.0 from 23.2 while Prices Received rose to 17 from 9.5, showing a pick-up in both input and selling prices. Looking ahead, the forward-looking General Business Conditions improved, with a slight acceleration in New Orders and Shipments although Unfilled Orders eased, but still in expansionary territory. On prices, firms still expect prices to rise with the forward-looking Prices Paid easing to 35.1, a slower pace than the 40.0 in January while firms see Prices Received also slowing the pace of acceleration. Firms also expect the employment metrics to expand, just at a slower pace than initially thought.

NAHB HOUSING MARKET INDEX: NAHB Housing Market Index rose to 48.0 (prev. 44.0, exp. 46.0), to print its highest since August 2023 as declines in mortgage rates and expectations for Fed rate cuts boosted homebuilders' assessment of current and future home sales. Numerically, Current Single-Family Home Sales rose to 52 (prev. 48), while Home Sales Over Six Months and Prospective Buyers lifted to 60 (prev. 57) and 33 (prev. 29), respectively. Overall, Oxford Economics thinks the improvement in sentiment should support single-family housing starts in the near term, while further ahead notes, “As lower mortgage rates improve homebuying affordability, builders are scaling back their use of incentives to encourage home sales. That could limit future declines in new home prices.”

IMPORT/EXPORT PRICES: Import prices rose 0.8% in January (exp. 0.0%, prev. -0.7%) with the upside led by higher prices for both non-fuel and fuel imports. The rise in Import Prices was the first 1-month increase since September 2023 and the largest monthly advance since the index rose 2.9% in March 2022. Nonetheless, the report highlights import prices fell 1.3% over the past year and have not risen on a 12-month basis since January 2023. Export prices also rose 0.8% (exp. -0.1%, prev. -0.7%) where higher nonagricultural export prices more than offset lower agricultural prices. Similar to the import prices, the advance was the first monthly rise since September 2023 and on a Y/Y basis export prices decreased by 2.4%.

15 Feb 2024 - 21:24- Fixed IncomeData- Source: Newsquawk