Advance retail sales in June

Transcription

1 Contacts Felix Boni Chief Credit Officer Jordy Juvera Economics Associate Cynthia Pérez Economics Analyst HR Ratings comments on the accelerating growth of retail sales in June, suggesting a strong rebound for consumer spending in 2Q18, although the relationship between the two appears to be weakening. The advance retail sales report for June shows stronger growth than the already positive May numbers. On an annualized quarterly basis total retail and food services sales increased 7.86% on an adjusted nominal basis vs. 1Q18. This is larger than the 5.16% increase for the quarter ending in May vs. the three-month period ending in February. In this report we also perform a simple exercise which suggests that total consumer spending for 2Q18 might advance 2.75% vs. the first quarter on an annualized real dollar basis. In June, gasoline stations sales advanced a particularly strong 12% vs. the first quarter, although even excluding these total sales were still up an impressive 7.48%. Food sales were also up strongly, advancing 12.43% on an annualized basis. Excluding both categories, retail sales advanced a less robust but still highly positive 6.77%. June Seasonally Adjusted Monthly Retail Sales in Millions of USD (3MMA) YoY Change QoQ Change* Retail and Food Services, Total 474, , , % 7.86% Total excluding Food Services 418, , , % 7.26% Total excluding Motor Vehicles & Parts 376, , , % 7.73% Total excluding Gasoline Stations 438, , , % 7.48% Total excluding Food and Gasoline 382, , , % 6.77% Food Services 56,104 57,795 59, % 12.43% Motor Vehicles and Parts Dealers 98, , , % 8.35% Gasoline Stations 36,653 41,668 42, % 12.00% Source: HR Ratings w ith data from the U.S. Census Bureau, retrieved from FRED, Federal Reserve Bank of St. Louis. *Quarter vs. immediately prior quarter at annualized rate. In analyzing these data, it is always relevant try to determine what the nominal advances might mean in real dollar terms. The single most relevant, but not necessarily valid, indicator is goods inflation measured by the PCE deflator. On a similar annualized basis, inflation by this measure was 2.0%, 0.61% and 0.0% in March, April and May. Even assuming the strongest number of 2.0% for 1Q18 inflation vs. 4Q17, we arrive at a very strong 5.75%. Given this strong number it is also relevant to try to extrapolate what this might mean for goods consumer spending and thus for overall consumer spending which is the largest single component of GDP. Although there is a relatively strong relationship between retail sales and consumer goods expenditures, the relationship appears to have weakened a bit over the last couple of months with the April and especially with the May reports. In Graph 1 we show the relative evolution of total advance retail and food services sales and consumer goods spending. Hoja 1 de 5

2 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Advance retail sales in June Graph 1: Retail Sales and Consumer Goods Spending annualized change (3MMA) 1 1 Retail Sales Consumer Goods 9.0% 7.0% () () () Source: HR Ratings w ith data from the U.S. Census Bureau and BEA and retrieved from FRED, Federal Reserve Bank of St. Louis. The graph shows the opening of a gap starting with the April number and expanding noticeably with the May report. The growth also shows the substantial acceleration in retail sales in May and June. In Graph 2 we present the relative evolution of these same two variables but from an annual change perspective which by its nature is a bit less volatile. The gap was large although by historical standards not unusually so. Graph 2: Annual change in Retail Sales and Goods Consumer Expenditures (3MMA) 6.0% 5.5% 4.5% Total Retail Sales Consumer Expenditures: Goods 4.0% 3.5% 2.5% 2.0% 1.5% Source: HR Ratings w ith data from the U.S. Census Bureau and BEA and retrieved from FRED, Federal Reserve Bank of St. Louis. Based on nominal seasonally adjusted data Hoja 2 de 5

3 Jun-13 Advance retail sales in June In Graph 3 we show the relative evolution of retail sales excluding relevant components. As has been the case the elimination of gasoline sales, which represent roughly 8.5% of the total noticeably lowers overall growth. This reflects recent strong increases in gasoline prices. Graph 3: Retail sales annual change - excluding key categories (3MMA) 7.0% 6.0% 4.0% 2.0% 0.0% Total Retail Sales Total excluding food services Total excluding motor vehicles & parts dealers Total excluding gasoline stations Source: HR Ratings w ith data from the United States Census Bureau and retrieved from FRED, Federal Reserve Bank of St. Louis. Based on nominal seasonally adjusted data To obtain an idea of what the second quarter consumer spending growth number might be (with two months of data, that could be revised with the June report), we simply assumed for June our estimates of the average month-over-month (MoM) real growth of the last three months. We did this for durable goods, non-durable goods and services (which represents roughly 68% of consumer spending). We also considered average discrepancies between the sum of these components and overall consumer spending. On the basis of our calculations, MoM growth for overall consumer spending has been quite volatile and trending downwards: 0.60%, 0.26% and -0.01% for March, April and May. With this approach we obtained a MoM real term growth number of 0.30% for total consumer spending in June, including 0.49% for goods spending and 0.18% for services. The June number returns quarterly annualized growth of 2.75% vs. the first quarter which had been particularly weak advancing only 0.86% vs. the fourth quarter surge of 4.04%. For goods spending, this exercise returns annualized 2Q18 growth of 4.70%. Hoja 3 de 5

4 HR Ratings Senior Management Management Chairman of the Board Vice President Alberto I. Ramos Aníbal Habeica Chief Executive Officer Fernando Montes de Oca Analysis Chief Credit Officer Chief Operating Officer Felix Boni Álvaro Rangel Deputy Chief Credit Officer Pedro Latapí Public Finance / Infrastructure Financial Institutions / ABS Ricardo Gallegos Fernando Sandoval ricardo.gallegos@hrratings.com fernando.sandoval@hrratings.com Roberto Ballinez roberto.ballinez@hrratings.com Corporates / ABS Methodologies Luis Quintero Alfonso Sales luis.quintero@hrratings.com alfonso.sales@hrratings.com José Luis Cano joseluis.cano@hrratings.com Regulation Chief Risk Officer Head Compliance Officer Rogelio Argüelles Rafael Colado rogelio.arguelles@hrratings.com rafael.colado@hrratings.com Business Development Business Development Francisco Valle francisco.valle@hrratings.com Hoja 4 de 5

5 Mexico: Avenida Prolongación Paseo de la Reforma #1015 torre A, piso 3, Col. Santa Fe, México, D.F., CP 01210, Tel 52 (55) United States: One World Trade Center, Suite 8500, New York, New York, ZIP Code 10007, Tel +1 (212) HR Ratings de México, S.A. de C.V. (HR Ratings), is a Credit Rating Agency authorized by the National Banking and Securities Commission (CNBV), registered by the Securities and Exchange Commission (SEC) as a Nationally Recognized Statistical Rating Organization (NRSRO) for the assets of public finance, corporates and financial institutions as described in clause (v) of section 3 (a) (62) (A) of the US Securities Exchange Act of 1934 and certified as Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). HR Ratings de México SA de CV (HR Ratings) ratings and/or opinions are opinions of credit quality and/or regarding the ability of management to administer assets; or opinions regarding the efficacy of activities to meet the nature or purpose of the business on the part of issuers, other entities or sectors, and are based exclusively on the characteristics of the entity, issuer or operation, independent of any activity or business that exists between HR Ratings and the entity or issuer. The ratings and/or opinions assigned are issued on behalf of HR Ratings, not of its management or technical staff, and do not constitute an investment recommendation to buy, sell, or hold any instrument nor to perform any business, investment or other operation. The assigned ratings and/or opinions issued may be subject to updates at any time, in accordance with HR Ratings methodologies. FORWARD-LOOKING STATEMENTS Certain statements included in this presentation may include forward-looking statements. These statements are not historical facts, but instead represent only HR Ratings beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the HR Ratings control. It is possible that HR Ratings actual economic projections and financial conditions may differ, possibly materially, from the anticipated results and financial conditions indicated in these forwardlooking statements. NO DUTY TO UPDATE HR Ratings assumes no obligation to update any information or forward-looking statement contained herein, save for any information required to be disclosed by law. Hoja 5 de 5