MNI 5 THINGS: US August Retail Sales Seen +0.4%;Some Auto Drag

Repeats Story Initially Transmitted at 17:30 GMT Sep 13/13:30 EST Sep 13

     WASHINGTON (MNI) - The US retail sales report for August will be released

Friday and the outlook is for a 0.4% rise for overall sales and a 0.5% rise

ex-auto, based on an MNI survey of analysts. 

     However, market participants see a 0.7% gain for overall sales, likely due

to a more optimistic view of gasoline station sales. Stronger gasoline prices

should offset an expected flat to down reading for vehicle sales.

     Ahead of the release, we outline five themes for particular attention.

--DOWNSIDE RISK TO HEADLINE ESTIMATE

     Analysts are forecasting a 0.4% month/month rise in headline retail for

August. There is a clear downside risk to this forecast, as analysts have a

history of overestimating the headline value. In the last 20 years, they have

overestimated 11 times, with an average miss of 0.38pp, and underestimated six

times, with an average miss of 0.32pp. More recently, analysts have

overestimated the August headline value five times and underestimated just three

times in the last 10 years, with the average misses for over- and underestimates

roughly the same.

--UPSIDE RISK TO EX-AUTO SALES

     Unlike headline retail, analysts tend to underestimate ex-auto sales in the

month of August. This month, they are expecting ex-auto sales to rise 0.5%. In

the last 20 years, they have underestimated nine times and overestimated seven

times. 

     Historically, the magnitude of their misses for this category, averaging

0.27pp for underestimates and 0.33pp for overestimates, suggest a 0.3 percentage

point miss is not out of the question. In the last 10 years, analysts have been

more evenly split in their misses, with four overestimates (including the last

two years) and five underestimates, with the absolute average miss around 0.27

percentage point.

--MIXED ANALYST/MARKET EXPECTATIONS

     Markets are anticipating a 0.7% rise in retail sales while analysts have

forecast a 0.4% gain for this month. Over the last year, markets and analysts

have diverged in the direction of their misses. Markets have overestimated

retail sales seven times and underestimated it four times, compared to analysts

who have overestimated four times and underestimated five times. 

     When markets overestimate, they miss by an average of 0.53pp and when they

underestimate, they miss by an average of 0.68pp. Analysts, on the other hand,

typically miss by a smaller margin, 0.40pp when they overestimate and 0.36pp

when they underestimate. 

     Even though analysts have a tendency to overestimate retail sales in August

reports, their misses in the last 12 months, have not shown a distinct trend,

suggesting that there is no clear risk for this month's forecast. However,

market overestimates in the last 12 months would suggest a downside risk for

this retail sales report.

--UPSIDE RISK TO STATION SALES FROM CPI GAS 

     Ahead of the Friday release, the Bureau of Labor Statistics released the

August Consumer Price Index Report, which indicated that the CPI for gasoline

had increased by 3.0% in August. The CPI for gasoline is a strong correlate of

retail gas station sales, indicating upside risk for August sales. However, it

should be noted that while gasoline CPI and gas station sales are strong

correlates, gasoline CPI is more volatile than retail gas station sales, so the

anticipated gain in gasoline station sales may be more moderate than the gain in

gas CPI.

--AUTO SALES SEEN FLAT, DOWN SLIGHTLY

     Analysts are expecting ex. auto sales to come in slightly weaker than the

headline number in August due to a slight decline in unit auto sales. An MNI

calculation of North American-made vehicle sales shows a decline in auto sales

that was offset by stronger light truck sales. Unlike July, however, the decline

in unit sales should not be offset by any change in vehicle prices as CPI prices

for new vehicles were flat in August.

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

--MNI Washington Bureau; +1 202-372-2121; email: shikha.dave@marketnews.com

--MNI Washington Bureau; +1 (973) 494-2611; email: harrison.clarke@marketnews.com