USD today: United States’ retail sales figures disappoint at 0.1%

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on Jun 18, 2024
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  • The United States' Census Bureau released worse-than-expected figures for May 2024's retail sales.
  • While economists had broadly expected a 0.3% rise after a tough April, only 0.1% increase was reported.
  • The disappointing retail figures may be an additional push for the Fed to lower interest rates soon.

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Today, the U.S. Census Bureau announced the United States’ advance monthly sales figures for May 2024, for retail and food services in the nation.

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In anticipation of the data, the US dollar has been trading higher against most other currencies today, including the Euro, with the EUR/USD struggling and experiencing pressure near 1.074 mark, Japanese yen, where the USD/JPY moved to above 158.00 earlier.

However, the US sales figures rose just 0.1% in May, disappointing the market’s expectations.

Furthermore, this came after a 0.2% drop in sales for April 2024.

April’s sales had previously been reported to have been unchanged last month at 0%, but were downwardly revised to 0.2% drop today.

Analyst forecasts

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Ahead of the announcement, analysts broadly forecast between a 0.2% and a 0.3% rise in US retail sales for May, compared with April 2024.

This forecast means a significant increase, and something of a rebound, for the beleaguered US retail sector, which showed a stalled retail sector last month with 0% growth in retail sales.

Up until now, the US economy has seen muted spending throughout 2024, thanks to high inflation and, subsequently, high interest rates.

A rise in retail sales before rate cuts has generally not been anticipated but, if shown, means an impressive amount of resilience in consumer spending.

Why do the US retail sales figures matter?

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One of the most accurate indicators of a country’s economic activity is whether or not its population is buying goods and services in abundance, or tightening their belts due to adverse conditions.

The U.S. Census Bureau’s monthly retail sales figures are the United States’ official data for the monthly and annual value of retail sales across the country.

As such, a higher or higher-than-expected retail sales figure is considered a bullish indicator for the USD.

Conversely, a lower or weaker-than-anticipated retail sales number is often a bearish sign for the dollar and the US economy, and may be the push the Fed needs to signal a rate cut closer to September 2024 than, say, December.

Climbing US retail sales figures, or higher-than-expected readings, may also mean that the US Federal Reserve, who adopt an ultra-cautious higher-for-longer rates stance, feel they won’t need to reduce interest rates just yet, as the economy is proving resilient enough without them.

In contrast to these figures, recent data from the National Retail Federation (NRF) showed that retail sales jumped significantly in May, showing strong increases both month over month and year over year.

The data showed that total May 2024 retail sales, excluding automobiles and gasoline, were up 1.35% seasonally adjusted month over month and up 3.03% unadjusted year over year, according to the Retail Monitor. That compared with an increase of 0.26% month over month and a decrease of 0.6% year over year in April.

According to the NRF, retail sales in the US are expected to increase 3.5% to between $5.23 trillion and $5.28 trillion in 2024.

BTOS coming later today

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Also out later today, the U.S. Census Bureau will release new data products from the Business Trends and Outlook Survey (BTOS), a survey that measures business conditions and projections on an ongoing basis. 

Should the BTOS give positive figures, this could provide an additional push for the ever-strengthening US dollar today, if the retail sales figures make a dent in the ever-strengthening USD’s ascent.

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