US Retail Sales with a big beat

US Retail Sales for October have smashed expectations. However, interestingly, there has been no real strengthening of the USD as a result.

According to the US Census Bureau, US Retail Sales significantly beat expectation in October, with an unadjusted month on month increase of +1.7% from September. This also means that retail sales were +16.3% higher in October 2021 than compared with a year ago.

These numbers beat the consensus forecasts, with:

  • Retail Sales +1.7% (+1.4% exp, +0.8% in September.
  • Retail Sales ex autos (adjusted) +1.7% (+1.0% exp, +0.8% last)

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What does this mean?

According to Danske Bank, these numbers remain way beyond the long term trend for sales. COVID-19 has certainly changed the spending habits of consumers (more goods bought, but fewer services used). This would suggest that the supply bottlenecks issue (supply unable to satisfy demand) remains a problem and will be an inflationary driver for the coming months.

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 Initial Market Reaction

It is interesting to see that USD has NOT strengthened on this. It is far too early to say, but could this be a sign of USD exhaustion, at least near term.

When strong US economic data drives a weaker USD, this is something to take notice of. After an initial knee-jerk move lower on EUR/USD, there has been an unwinding move, with the market a little cautious. GBP/USD has even rallied, currently around +20 pips higher. US index futures are all but flat, whilst gold has made a limited move.


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