In April, US retail sales rose for the 10th consecutive month, in line with expectations. On a monthly basis, retail sales increased by 0.5% M/M and the previous figure was sharply upwardly adjusted (from 0.4% M/M to 0.9% M/M). The details show that the increase was again led by gasoline station sales (2.7% M/M), while also sales of food and beverages (1.2% M/M) rose significantly in April, probably due to Easter. Sales of electronics (-2.2% M/M), sporting goods (-1.9% M/M) and furniture (- 1.1% M/M) dropped significantly. Excluding sales of autos and gas, retail sales showed a more modest increase (0.2% M/M). The sharp revisions in the March data might lead to an upward revision in the GDP data. Overall, US retail sales remain on track, despite the fears that higher energy and commodity prices would hurt consumer demand.
In the week ended May the 7th, initial jobless claims dropped significantly, reversing most of the previous week’s jump. Initial claims fell by 44 000, from an upwardly revised 478 000 to 434 000, slightly above the consensus estimate. The four-week moving average, on the contrary, continued its uptrend, rising from 432 250 to 436 750. The Labour Department added that the drop in claims partly reflects the prior week’s higher than expected rise due to factors not anticipated by seasonal adjustment. Besides that, a large increase in claims Alabama due to the storms, kept the claims at relatively high levels. Continuing claims, which are reported with an extra week lag, rose slightly, while a decline was expected. In the week ended April the 30th, continuing claims rose by 5 000 from an upwardly revised 3 751 000 to 3 756 000, while the consensus was looking for a decline to 3 700 000. Although initial claims dropped significantly, which is an encouraging sign, they remain significantly above the February and March levels, when claims fell below 400 000. We hope to see the claims declining further to those levels in the coming months.
US producer prices surprised again on the upside of expectations. In April, PPI rose by 0.8% M/M to an annual level of 6.8% Y/Y, while the consensus was looking for an outcome of 6.5% Y/Y. The details show that upward price pressures were broad-based and were again led by residential gas (3.5% M/M) and gasoline (3.6% M/M). Core PPI rose by 0.3% M/M, with the annual level rising above 2.0% Y/Y, to 2.1% Y/Y, for the first time since August 2009. Within the core reading, prices of civilian aircraft (1.2% M/M), light motor trucks (0.6% M/M), passenger cars (0.5% M/M) and residential electricity (0.4% M/) jumped significantly. The steep uptrend in core PPI signals that higher prices for energy and commodity are feeding through into other products.