Key U.S. retail sales preview - Nomura

Analysts at Nomura offered a preview for the key retail sales data for September.

Key Quotes:

"The retail sales report for August showed a slowdown in consumer activity, consistent with the broad slowdown in economic activity seen over the month. The slowdown appeared to be broad-based, as 5 categories out of 13 showed a m-o-m increase in August. Given the latest data on the US economy, we think that the pause in consumer spending should prove temporary. The ISM nonmanufacturing index surprised to the upside in September, jumping over 5 points to 57.1, the highest reading since October 2015. Plus, job and wage growth have been steady over the year.

Taking these factors into account, we forecast that core retail sales increased by 0.4% m-o-m in September, a solid rebound following two consecutive months of declines (Consensus: +0.3% m-o-m). On noncore components, we expect the motor vehicles and parts category to show a solid rebound, as vehicle sales rebounded strongly in September after a slowdown in August.

Gasoline prices trended higher in September, which should boost sales at gasoline stations. Also, we expect a sizeable rebound in spending on building materials.

All together, we forecast that retail sales increased by 0.7% m-o-m (Consensus: 0.6% mo-m) and retail sales excluding autos to increase by 0.5% m-o-m in September (Consensus: 0.5% m-o-m)."