By Denny Gulino
WASHINGTON (MaceNews) – The November retail sales report from the Census Bureau is the highlight among the upcoming week’s economic data with housing starts along for the ride, readings in two industries doing better than expected during the pandemic.
Retail sales through October were up 5.7% from a year earlier according to the government report. Some private analysts, including a broader swath of sales to include infomercials and even street vendors, saw an even more robust performance. With inventories relatively low, predictions for sales momentum to continue through the Christmas buying season were widespread.
October sales were up 0.3% after a September that exceeded expectations with a 1.6% gain. Forecasts for the entire fourth quarter see a 0.9% increase (Moody’s Analytics) and a strong pickup in the first quarter of next year of nearly twice that.
Leading the way has been electronic commerce, pegged in the government report to be up 21.9% over 12 months. The category is less than a seventh of total retail sales, however. For the month of October there were 10 categories in the red and five other categories running positive.
The November retail sales report will be at 8:30a ET Wednesday. The Econoday.com consensus forecast is for an overall decrease of 0.3% after October’s same-sized move in the opposite direction. Ex-vehicles is seen moving up 0.1% and the so-called control group, up 0.2%.
Housing starts, to be reported Thursday at 8:30a, rose 4.9% in October to an annual rate of 1.530 million, part of a strong 12 months in which starts rose 14.2%. The housing rebound is old news, and October’s rate of starts, while still not meeting the demand for lower priced homes, is a long way from the rate of production a year earlier. The Econoday.com consensus is for no change in the November reading.
Besides the week’s data, calendarized below, there is also the Federal Reserve policy meeting Tuesday with a Wednesday afternoon announcement and chairman’s news conference, a state-by-state Electoral College vote that cements the coming Biden presidency, a congressional vote on an FY 2021 budget that will be needed to prevent a government shutdown Friday at midnight and possibly some progress on a pandemic relief package that could influence the economic data in coming months.
Steve Beckner’s preview of what’s ahead in the Fed meeting is elsewhere on this macenews.com site.
The past week saw inflation fears – somewhat exacerbated by the CARES Act income replacement as well as any new trillion-dollar sized package – rebutted by a Consumer Price Index dominated by housing components which markedly diminished. The shelter component has risen only 0.1% for four months through October, guaranteeing a disinflationary cast to the entire report. The two rent indexes were unchanged.
Among those who disagree, First Trust’s Brian Wesbury wrote, “Following a pause in October, consumer prices rose faster than the consensus expected in November and are now up at the fastest six-month pace in nearly a decade. With prices up at a 4.0% annualized rate since May inflation is running comfortably above the Federal Reserve’s inflation target of around 2%. “
Although the Fed favors the personal consumption expenditures tally as its main inflation guidepost, inflation expectations with which it is also concerned are mainly set by the CPI. In addition, Friday’s preliminary University of Michigan sentiment report showed inflation-rate expectations had dropped half a point October to November, to 2.3%, a strong signal that inflation fears are subsiding, not growing.
Upcoming week’s economic data:
Tuesday-Import/Export Prices, Empire State mfg, Redbook retail tally, Industrial production, TICS
Wednesday-Retail Sales, Markit Flash, Business Inventories, NAHB index, EIA oil stocks
Thursday-Jobless claims, housing starts, Philly Fed mfg
Friday-US current account, leading indicators, state-by-state unemployment
Separately, the Extract Analytics outlook for the SPX this week’s declines should be viewed as setting the stage for the next buying opportunity:
Contact this reporter: denny@macenews.com.
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