MNI 5 THINGS: US September Sales Seen +0.6%, Ex-Auto +0.4%

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

released Monday, and analysts are expecting overall sales to rise by 0.6% and

ex-auto sales to rise by 0.4%, based on an MNI survey of analysts.

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

--DOWNSIDE RISK OF OVERALL SALES

     Analysts are expecting headline retail to rise by 0.6% in September.

However, given their history of overestimating this value, there is a downside

risk to this forecast. Over the last 20 years, analysts have overestimated the

headline number 11 times by an average of 0.38pp and underestimated it seven

times by an average of 0.37pp. This indicates that a potential miss in either

direction this month is likely to be by relatively the same amount. Recently,

this trend has slightly changed in that analysts have overestimated and

underestimated four times each in the last ten years. Additionally, their

average misses have changed to 0.30pp for overestimates and 0.33pp for

underestimates. Still there is a possibility for a downside surprise to the

headline value in this report.

--NO CLEAR RISK FOR EX-AUTO SALES

     In the month of September, analysts have not shown a clear tendency to miss

in either direction for ex-auto sales. In the last 20 years, they underestimated

ten times, missing by an average of 0.24p, and overestimated eight times by an

average of 0.40pp. In the most recent ten years, they have a fairly even split

as well. They have overestimated four times and underestimated five times.

However, the magnitude of their misses in this time has been smaller, with

overestimates averaging 0.28pp and underestimates averaging 0.20pp. This

suggests that while the direction of a potential miss is not clear, if analysts

do miss, an overestimate is likely to be larger than an underestimate.

--MARKETS SEE SOFTER RISE

     This month, markets are expecting retail sales to rise by 0.4% while

analysts are expecting a stronger gain of 0.6%. A look at their respective

histories over the last year shows that markets have missed to the high side

seven times and analysts have done so four times. Markets have missed to the low

side four times and analysts have done so five times. This shows no clear

tendency for analysts to miss in either direction, but does reveal that markets

tend to overestimate. The magnitude of their misses is quite different, with

markets overestimating by an average of 0.53pp and analysts by 0.40pp and

markets underestimating by an average of 0.68pp and analysts by 0.36pp. Given

their history, it would seem as though markets are likely to overestimate.

However, since they are expecting a more modest gain than analysts this month,

it is likely that there may be a slight downside surprise to analysts' forecast.

--CPI GAS PRICE DOWNSIDE RISK

     Ahead of the release on Monday, the Bureau of Labor Statistics released the

September Consumer Price Index report, which indicated that the price of

gasoline fell by 0.2%. The CPI for gasoline is a strong correlate of gas station

retail sales, which suggests that gas station sales may come in soft in the

September report. It should be noted that if retail gas sales were to match the

decrease of the September CPI, it would only be a minor departure from a string

of strong gains going back to May of this year, and most recently being

continued by a gain in August of 1.7%. Further, since the CPI for gasoline is a

more volatile indicator than retail gas station sales, gas station sales are

likely to experience a less severe drop if they do fall.

--VEHICLE SALES POSITIVE FACTOR

     According to data from major auto manufacturers compiled by MNI, unit sales

of cars manufactured in North America saw strong performance in September with a

m/m unadjusted increase of 6.1% from August, a welcome change from August and

July, which both saw consecutive m/m and y/y declines. However, since the data

did not include cars manufactured by General Motors or imported vehicles, there

is still a possibility that autos may be softer than the industry data suggest.

Also important are the Consumer Price Index for both new cars and used vehicles,

which were down 0.1% for new cars and down 3.0% for used vehicles in September,

signaling that lower prices could mute gains in unit auto sales, and exacerbate

losses.

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

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

[TOPICS: MAUPR$,M$U$$$]