Review of US data expected this week
Retail sales
The data will be published on Tuesday, March 16, at 12:30 GMT.
We expect some modest payback in retail sales data for February after spending spikes in the previous month. Direct checks from the December fiscal stimulus package burned a hole in consumers’ pockets in January and led to the biggest increase in spending since June for most retailers. Automobiles are likely to play a large role in sales decline since January based on the monthly car sales data pullback. In fact, excluding cars, we expect sales to rise by 0.2%.
Some weaknesses may also show up in a restaurant component based on high-frequency OpenTable seating data. But other indicators suggest that activity and consumption as a whole continued to improve in February. Suppose consumption in February turns out to be higher than expected. In that case, the rapid improvement in the Covid situation and optimism about the improving economic background amid further stimulus are already driving up consumption.
A weaker result could mean an even larger pullback from the January spending spike than we predicted. After another round of fiscal stimulus, the bottom line went through last week. Many households are poised to receive another round of direct checks that are more than double the amount received in January. We expect spending to show another strong growth in just a few months. After that, a record amount of “surplus” savings should provide sufficient support to finance consumption as the public health situation improves and activity restrictions are lifted.
Retail sales are forecast to fall 0.4% in February after rising 5.3% in January.
Industrial production
The data will be published on Tuesday, March 16, at 13:15 GMT.
The manufacturing sector continues to report improved activity, fueled by low inventories and an increasing backlog of orders. But manufacturing in manufacturing is likely to run into trouble in February due to shortages of raw materials, especially semiconductor chips, which likely affected cars and computers’ production last month.
However, supply problems and shortages extend beyond chips and appear to devastate the sector. Longer delivery times from suppliers have been reported, and individual manufacturer comments in recent ISM reports continue to highlight difficulties throughout the supply chain. The harsh winter weather across the country in February also likely impacted production throughout the month. We expect industrial production to rise 0.5% in February.
If the output was worse than expected, supply problems and labor shortages are likely to have affected activity more than we expected. However, higher-than-expected production results suggest that the industrial sector continued to produce despite these headwinds.
Industrial production is forecast to rise 0.5% in February, after rising 0.9% in January.
Bookmarks of new houses
The indicator will be published on Wednesday, March 17, at 12:30 GMT.
Housing remains one of the strongest sectors of the economy, but we can see some short-term weakness in the February data. The harsh winter weather across the country in February likely influenced the laying of houses across the country. However, even with some short-term weaknesses, housing still has a lot of momentum.
Builders remain optimistic, with NAHB / Wells Fargo’s housing market index surging to 84 in February, in line with the six-month average. The exceptionally meager supply of single-family housing and our high demand expectations should continue to drive new housing starts this year. In particular, we expect home construction to gain momentum from lifting restrictions across the country this spring. However, this sector has its challenges. New home starts fell to 1.57 million in February from 1.58 million in January, according to forecasts.
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