Wednesday, January 15, 2014

Lacklustre US December Data

While the US saw inexplicably strong and uniform data in November, things went the other way in December, at least that's what the most recent data show. The Institute of Supply Management services index fell two points to 53, a six-month low. Auto sales fell by 7% on-month, putting them back at levels seen a year ago.
Meanwhile, non-farm payrolls dropped to 74,000, the lowest in three years. The three- and six-month average of payrolls now sit at 172,000 and 170,000, respectively, some 15,000 to 20,000 lower than they were six months ago.
US retail sales figures for December due Tuesday seem likely to disappoint too. Consensus expects growth of 0.1% on-month but given the 7% drop in auto sales noted above, that is a very high bar to jump. Control group sales are expected to rise 0.3%, which is more reasonable but still a high hurdle. If consensus turns out to be correct, on-year sales growth will amount to 4.3% – better than the 3.5% rate seen a couple of times in 2013 but still in the low range of outcomes seen since 2010.
There’s no question that October and November were big months for data. The question is, "Will it be sustained?" and December, cold though it was, isn’t point¬ing to the affirmative.