US: Consumers still in spending mood – Commerzbank

Dr Christoph Balz, Research Analyst at Commerzbank, suggests that the focus will be on US retail sales for July and they should highlight that US consumers are still driving economic growth.

Key Quotes

“The markets’ interest in the week ahead will probably focus mainly on US retail sales for July, as these will show how the US economy started Q3. After all, growth has recently relied mainly on the consumer. As a first indication, automobile manufacturers have already reported a hefty 7% increase in sales, with Americans showing a preference for purchases of relatively expensive light trucks.

All in all, we expect retail sales to rise by 0.4% on June (consensus: 0.3%). In fact, (nominal) retail sales may even underestimate the strength of business in July, because the sharp drop in petrol prices has depressed nominal sales at the gas pump. This would create the foundations for another strong gain in consumer expenditure in Q3. Nor is the expectation of such a notable increase contradicted by the fact that incomes have recently increased at a relatively slow pace, by only 0.2% in June. After all, income data is generally revised upwards.”