U.S. consumer spending showing signs of rebound

After a weak first quarter, consumer spending in the US is showing healthier signs. We remain upbeat about prospects for the rest of this year too.


Core retail sales in the US rose by 0.2% m-o-m in April, below consensus expectations (+0.4%). However, retail sales for March were revised up by 0.2%.

The result was that between Q1 and April, nominal core retail sales grew by a healthy 3.6% annualised, following an increase of 3.5% q-o-q in Q1 and 3.1% in Q4 2016. However, although up month on month (m-o-m) in April, car sales still contracted between Q1 and April.

Nevertheless, the marked decline in car sales witnessed in Q1 is unlikely to be repeated in Q2, consumption of utilities is rebounding sharply and, following a strong rise in Q1, gasoline prices are falling back again.

Together with reasonably upbeat core retail sales, these elements support the view that Q1’s near-stagnation in consumer spending will be followed by solid growth in Q2 (to a rate of around 2.7% q-o-q annualised in our view). And we remain upbeat on consumer spending in the second half of 2017 as well.


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