Focus for 14 JAN 2010: U.S. Retail Sales (December)

[imperialfxonline]

Focus for 14 JAN 2010: U.S. Retail Sales (December)

Retail sales forecast to increase by 0.5% in December after rising 1.3% in November
December same-store sales beat forecasts
Sales in January may dip after Christmas shopping spree

U.S. retail sales for the month of December will be released on Thursday 14th January at 13:30GMT (coinciding with European Central Bank President Jean-Claude Trichet’s press conference following the ECB rate decision at 12:45GMT) with analysts expecting sales to increase by 0.5% (0.3% excluding autos) in December after seeing two relatively strong gains of 1.3% and a revised 1.1% in November and October respectively. September’s fall of –2.3% was revised up to –2.0%. The predictions of economists polled by Reuters ranged from 0% to 1.4% for the December figure.

While retail sales picked up in November ahead of the Christmas season on early-bird sales with consumer confidence also edging higher due to encouraging signs of an economic recovery in the U.S., sales figures for December are likely to show only a modest gain as the labour market remains weak. However, surveys by Reuters and International Council of Shopping Centres Inc (ICSC) show a higher-than-expected rise in same-store sales for the month of December, showing a late surge in sales after 2009 turned out to be the weakest on record. The ISCS also forecast a rebound for 2010 of around 3-3.5%, which would be the best performance since 2006.

The cautiously-optimistic outlook on the U.S. economy, at least for the first quarter of 2010, suggest a further slowing of retail sales growth would be seen in January as consumer tighten their wallets after the Christmas sales. The latest jobs report showed a surprise loss of 85,000 jobs but the unemployment rate remained unchanged at 10%, the latter would have to drop below the 10% level on a sustained basis to boost consumer sentiment and spending.

Dollar (especially usd/jpy) will be most affected by a figure that falls far from the consensus forecast, with a weak result (0.3% or lower) likely to increase risk aversion and weigh on euro and sterling, since both currencies have been rising during recent trading sessions. A rise of 1.0% or more would be considered as strong growth and send usd/jpy and U.S. equities higher, but the revision to the November data should also be monitored.


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