US DATA
Retail sales closed December on a solid note, signifying continued strong domestic demand to end 2024.
- While headline retail sales growth was slightly softer than expected (0.4% vs 0.6% survey), but that was offset in part by an upward revision to November (0.8% from 0.7%).
- More importantly, the GDP-input Control Group category easily beat expectations, rising by a 3-month high 0.7% (0.4% expected and prior), with ex-auto (0.4%) and ex-auto/gas (0.3%) each missing expectations by 0.1pp but nonetheless accelerating 0.1pp from November's prints.
- The vast majority of retail sales category saw sequential growth, the exceptions being declines in food services/drinking places (the third-largest retail category, falling -0.3%), health/personal care, and building materials establishments.
- But the large categories were mostly solid: motor vehicles/parts +0.7%, non-store retailers +0.2%, food/beverage +0.8%, general merchandise +0.3%, gasoline +1.5%.
- All of those are in nominal terms. From an inflation-adjusted perspective, it looks as though retail sales momentum may have peaked earlier in Q4 (see chart). But that's still consistent with real PCE goods growth in the 4-6% Q/Q range for Q4 (though not necessarily so for real PCE services, as we have been pointing out for the past few months).
- And momentum remains solid overall, with total sales rising 7.3% on a 3M/3M annualized basis nominal / 6.3% real, and control group up 5.4% on that basis in nominal terms/ 4.2% real, marking 4 to 5 months of well-above trend expansion.
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