US Retail Sales Beat Estimates, Inflation Ticks Up

Summary

Michael McKee reviews the November US retail sales and producer price index data. Retail sales rose more than expected, but the control group slowed from a revised October gain. PPI picked up, with core PPI up 3.5% year over year, and McKee says the data suggest the Fed will not cut rates soon while inflation remains a concern.

• November retail sales rose 0.6%, with ex-autos up 0.5% and ex-autos-and-gas up 0.4%.
• The retail sales control group rose 0.4%, down from a revised 0.6% October gain.
• November PPI rose 0.2%; headline PPI was up 3.0% year over year.
• Core PPI rose 0.2% for the month and 3.5% year over year, the largest 12-month increase since March.
• Michael McKee says the PPI and retail sales data suggest the Fed will not cut rates soon and inflation remains on the menu.
• Retail category details showed motor vehicle sales up 1%, building materials up 1.3%, gasoline sales up 1.4%, and clothing stores up 0.9%.
• Department stores fell 2.9% and general merchandise was flat, with McKee saying holiday gift sales were not as good as hoped.
• McKee notes the data are dated because the government shutdown left gaps in October reporting.