MNI 5 THINGS: US November Retail Sales Seen Up 0.1%;Gas Plunge

     WASHINGTON (MNI) - The US Retail Sales Report for November will be released

Friday, and analysts are expecting both overall and ex-motor vehicle sales to

rise by 0.1%, based on an MNI survey.

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

--UPSIDE RISK TO HEADLINE

     This month, analysts are anticipating a 0.1% increase in headline retail,

but with an upside risk to their forecast. In the last 20 years, they have

underestimated headline retail 12 times and overestimated it seven times. In the

most recent 10 years, there has been a smaller gap, with six underestimates and

four overestimates, with the roughly even sized misses on both sides. As misses

are slightly tilted toward underestimates, there is an upside risk to their

expectations for a soft headline value.

--EX-MTR VEH SURPRISE POSSIBLE

     Analysts' History Suggests Upside Risk For Ex-Vehicle Sales. Similar to the

trend with headline retail sales, analysts tend to underestimate ex-auto sales

in the month of November. Over the last 20 years, they have done so 12 times,

versus five overestimates. Six of their underestimates have occurred in the last

ten years, compared with two overestimates. The lean toward an overestimate is

even larger for ex-motor vehicle sales than it is for overall sales.

--MARKETS AIMING HIGH, OFTEN TOO HIGH

     Analysts are expecting retail sales to have increased by 0.1% in November,

while markets are expecting a huge 0.9% increase, suggesting that not all of the

auto softness seen by analysts will actually appear in the report and other

components will offset the expected gasoline station sales weakness. While

analysts have a history of underestimating sales slightly more often than

overestimating over the last year, markets have overestimated sales seven times

vs only four underestimates, indicating the market's more-optimistic view is not

often rewarded. Additionally, analysts have been correct three times in the last

year compared with only one correct estimate by markets over the same period, so

it appears likely that the actual result will be closed to the analyst estimate

of a 0.1% gain that the 0.9% surge expected by markets.

--CPI GAS NEGATIVE FACTOR

     Earlier this week, the Bureau of Labor Statistics' monthly CPI report

showed that the price of gasoline posted a sharp 4.2% decline, adding a strong

degree of downside risk for retail gas station sales. While the gas station

sales number is typically less volatile, there is some correlation between the

two series.

--AUTO SALES REVERSAL

     November industry sales data compiled by MNI from major auto manufacturers

showed that combined domestic-made unit auto and light truck sales slipped in

the month, mostly due to cars. While the figures did not include imports,

sources of those data show similar movements. So unless General Motors data,

which the company does not release to the public on a monthly basis, were

stronger than their competitors, motor vehicle sales should be a slight negative

for overall retail sale.

--MNI Washington Bureau; +1 202-371-2121; email: shikha.dave@marketnews.com

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

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

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