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    US: Retail sales steady in May – Nomura Sandeep Kanihama

    Research Team at Nomura, notes that according to the US Census Bureau, US retail sales increased by 0.5% m-o-m in May, modestly better than market expectations (Nomura: 0.3%, Consensus: 0.4%).Key Quotes“Core retail sales, which excludes auto, gasoline, building material, and food services and drinking places sales, increased by 0.4% m-o-m in May (Nomura: 0.2%, Consensus: 0.3%) following an upwardly revised 1.0% m-o-m increase in April (previously reported as 0.9% m-o-m).The better-than-expected May core retail sales and the upward revision to the April number suggest better consumer activity in Q2 than we previously anticipated. Taking the new data into account, we revised up our Q2 GDP tracking estimate 0.2pp to 2.4% from 2.2%. Q1 GDP tracking was unchanged at 1.3% as the March revisions were modest.The details of the report showed mixed performance across sectors. Overall, this report on the consumer was a mixed bag of goodies. However, on balance, it suggests that domestic demand remained on a steady track in May following an outsized increase in April. In our view, it doesn't increase the probability of a June rate hike, and we’ll likely need to see stronger data sustained over several weeks to keep a July interest rate increase as a viable option. Currently, we think that the most likely timing of the next rate increase is in September.”


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