There are two data points today, with retail sales perhaps the most important indicator of this week. In addition to the data, Bernanke heads to Capitol Hill for the first of two days of semi-annual Congressional testimony. The BLS also publishes revised seasonal adjustment factors for PPI. January PPI data are slated for Friday.
[Retail Sales (Jan)] IFR sees total retail sales rising by 0.9% in January, the same advance as in December but less than a third of the jump in January 2006 (3.1%). Net of an anticipated 0.1% increase in sales by motor vehicle and parts dealers, we see sales rising by 1.1%, the best in 12 months.
Gains in retail sales and food services should come across the board, led by an anticipated 4.4% rise in sales of electronics and appliances, a 3.0% rise in gasoline station receipts and a 2.9% rebound in sales at miscellaneous stores. Clothing and accessory stores should have their best sales month since September while trend suggests a 1.0% rise in sales at health and personal care stores. Net of autos and gasoline, sales should be higher by 0.9%, also the highest since last January (2.5%). After excluding building materials, autos and gasoline, sales of 0.9% would be the same as in December.
The anticipated result would leave the 3-month annualized rate of total retail sales at 9.5%, the best since March 2006 (11.6%). There's a great deal riding on this indicator, as it sets the stage for GDP growth in Q1 if not the entire year.
[Business Inventories (Dec)] Provided retail inventories fall on trend (down 0.2%), the factory order rise of 0.1% and the wholesale inventories drop of 0.5% should drop business inventories by 0.3% in December. This would be the slowest growth rate in 17 months and the slowest year-ago rate (5.9%) since May 2006.
However, business sales will have risen by 1.3%, the fastest since May 2006. The year-ago change should rise 4.3%, highest since September 2006. The I/S ratio should then taper to 1.281, the lowest since August 2006.
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