US Retail Sales Report – March 2009
March 11th, 2009 Posted in In-Depth Analysis, Market Movers
U.S. Retail Sales is a leading economic indicator used to measure the percentage change in the total value of sales at the retail level during the previous month. It is a leading indicator of economic health because the report reflects a wide variety of consumer spending, such as restaurants, consumer goods, and automobiles.
Consumer sentiment can also be derived from this survey in order to gauge the outlook on the U.S. economy. This report is the earliest indicator of consumer spending released by the U.S. Census Bureau. An additional report released at the same time is the Core Retail Sales report, which does not include sales of automobiles. When used together, the reports paint a picture of the state of the U.S. consumer. This survey predominantly helps to analyze market trends and to determine the direction of the U.S. economy.
If the Survey Comes Inline with Market Forecasts
Expectations for this month are suggesting that the U.S. Retail Sales will fall by 0.5% in February. The U.S. economy is currently facing both an economic crisis and a financial crisis, triggered by a downturn in the housing market, a lack of credit, and the reluctance of banks to lend. Consumers may have delayed large purchases on account of the deteriorating economy and a lack of credit could adversely affect this report.
The sale of new autos accounts for roughly 20% of the report’s total and are largely financed by bank loans. The recent drop in equity markets may also add to a negative outlook for the American consumer which could reduce their spending on non-essential items. A decreasing figure will most likely be interpreted by investors that the American people are scaling back their purchases in a time of financial uncertainty. Such a scenario will probably move the greenback down and the EUR/USD might rise to test the 1.2900 level.
If the Survey Will Surprise With Bullishness
When the actual figure is higher than forecasted, traders are likely to see the USD appreciate against its currency pairs and crosses. The volatile two trading weeks we have just experienced concluded with significant strength for the USD. Investors are now following the opportunity to make profits out of their open positions on the USD, and a better-than-expected figure on the Retail Sales survey, such as 0% or higher will possibly provide them that exact opportunity. Such a figure is good because it will ease some concerns regarding a contracting U.S economy. If U.S. citizens are increasing their purchases, this may reduce pressure in a tough market and push the USD higher.
With a decrease in gas prices that are down 47% from their highs, consumers may see an increase in disposable income, reflecting in additional purchases. In this turn of events, the EUR/USD might correct itself down to reach as low as the 1.2500 level.
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