The surprisingly weak reports this morning on the U.S. labor market and consumer spending run counter to the recent run of favorable economic data. It is difficult to tell whether this morning’s disappointing readings reflect one-off seasonal distortions or the start of a trend reversal. The latter seems unlikely given the absence of any corroborating evidence in other reports. If anything, all other readings of the U.S. economy are pointing towards continued positive momentum.
Beyond U.S. shores, we have subdued inflation numbers out of China. And the European Central Bank (ECB) acted as expected by leaving interest rates unchanged. We also have successful bond auctions in Italy and Spain this morning that are pushing their bond yields in the right direction.
The major news of the day pertains to the soft economic readings on the Retail Sales and Jobless Claims fronts. December Retail Sales numbers came in weaker than expected, up 0.1% compared to expectations of 0.3% gains. This compares to the November gain of 0.4%, which was revised upwards from the originally reported 0.2% level. 'Core' Retail Sales, which excludes automobile and gasoline sales data, also came in weaker than expected.
This is the weakest Retail Sales reading since May 2011 and runs counter to the recent trend of improving trends in the building blocks of consumer spending. Measures of consumer confidence have been moving up and the labor market has been steadily moving in the right direction, notwithstanding the jump in today’s jobless claims numbers.
The Retail Sales report is admittedly not a perfect proxy for consumer spending since it only includes 'goods' sales at retail establishments and leaves out the much bigger consumer outlays on 'services.' But it nevertheless provides valuable clues to trends in consumer spending, which is the backbone of the U.S. economy.
Momentum on the consumer spending front can be sustained only if the recent improving trend on the labor market front remains in place. This morning’s Jobless Claims report runs counter to that trend, though it is not unusual to see one-off seasonal distortions in this series.
We got a major jump in initial Jobless Claims this morning, up 24K to 399K. The four-week average increased by 7.8K to 381.8K. This report reverses the gains of the last many weeks and takes us perilously close to the 400K level.
On the earnings preannouncements front, we got positive guidance from Tractor Supply Company (TSCO), while Chevron (CVX) guided lower. PVH Corp. (PVH) provided a positive outlook for the fourth quarter given strength in its Calvin Klein and Tommy Hilfiger brands, but provided a modestly disappointing outlook for 2012 by pushing the gains to the second half of the year.
Today’s Retail Sales report, coupled with the trend reversal in the jobless claims data, is disappointing. We have to see whether this is the start of a downtrend in U.S. economic readings or the typical erratic behavior of monthly economic data. |
发表于 2012-1-12 11:31
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发表于 2012-1-12 11:35
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