US Retail Sales Preview: Forecasts from seven major banks, retreat in consumption for first time since March

We expect weak unit motor vehicle sales to encourage a -0.4% print on the headline (from +0.7%), with the same forecast for Sales ex Auto (from +0.6%) due to lower gasoline prices. We expect Retail Control, which goes into GDP, to be only +0.1% (from +0.6%). This grew at an annualised +6.8% in Q3. So potentially a big step down.

We expect Retail Sales to retreat (-0.3%) for the first time since March, following much stronger gains over Q2/Q3. Volatile auto and gas station sales will likely be the main culprits behind weaker growth, while the key Control Group is expected to lose momentum. We also look for sales in bars/restaurants to decelerate, as services spending is likely to start Q4 on a weaker footing.

We anticipate US Retail Sales to edge down 0.3% in October. Gasoline station sales likely fell on lower prices.

Judging from previously released data, motor vehicles and parts dealers as well as outlays at gasoline stations could have contributed negatively to the headline figure. All told, we expect total sales to have contracted 0.1%. Ex Auto outlays could have been a tad stronger, remaining unchanged month on month.

We look for a 0.3% decline in October Retail Sales that captures a modest reversal in the 1% gain of September and a 4.0% drop in gasoline prices. 

High-frequency credit card spending data point to a further pick up in the Retail Control Group in October, which we think will be 0.3% MoM. Weak auto sales and gas prices in October, however, will likely cause the headline advanced reading to show a contraction of -0.2% MoM. A reading above our forecast and the steadying of the saving rate at a very low level would challenge’s the Fed’s theory that the supply side of the economy is partly responsible for surge in activity. 

We forecast Retail Sales declined 0.2% in October. Consumers who pulled their holiday spending forward to take advantage of Amazon's Prime Big Deal Days and Target's Circle Week last month pose an upside risk to our call.