Impressive U.S. retail sales gains
Impressive U.S. retail sales gains of 0.8% for the headline and 0.9% ex-autos followed upward revisions that narrowed the gap to the tax-related Q1-Q2 disposable income surge. The upside May retail sales surprise reflected a big 2.4% building material sales pop, and a 2.0% rise for gasoline service station sales that beat a 1.7% gasoline price increase. Analysts also saw a 0.5% auto dealer sales rise despite a 1.8% decline in unit vehicle sales. Retail sales excluding autos, gasoline and building materials, which guide real PCE estimates, rose by an expected 0.6% in May after gains of 0.5% (was 0.3%) in April and 0.6% in March. Analysts still assume a Q1 GDP growth boost to 2.4% from 2.2%, with a $1 B Q1 nondurable consumption hike that joins a $3 B downward service consumption bump, and boosts of $8 B for net exports and $5 B for construction. Analysts expect Q2 GDP growth of 3.6%, with a 3.4% (was 3.3%) growth rate for real consumption in Q2 after a 1.0% clip in Q1. Analysts assume a 0.4% May PCE rise in nominal terms with a 0.2% "real" increase, alongside 0.2% PCE headline and core chain price gains that track the CPI increases. The business inventory report later this morning will reveal a 0.4% April sales rise, after a 0.6% (was 0.5%) gain in March.