Week In Review 5.20.2019

Retail Sales—After a 1.7% surge in March, which was among the largest monthly increases in a decade, retail sales fell -0.2% in April. However, control group sales, which serve as a proxy for personal consumption in the GDP report, were unchanged in the month after a slight upward revision to the March print. The M/M slowdown indicates an underlying weakening in consumer spending, which is in-line with expectations of slower economic growth this year. As an aside, E-commerce sales increased by 3.6% in Q1 and were up 12.4% Y/Y. Their share of total retail sales has climbed to a fresh record high of 10.2%, reflecting the structural shift in retail trade from brick and mortar to online activity.

Manufacturing—Amid trade tensions, industrial production declined -0.5% in April. Additionally, manufacturing, which accounts for ¾ of the industrial production print, also fell -0.5%. On a Y/Y basis, industrial production continues to cool, posting a less than 1.0% increase, the slowest pace since February 2017.

Housing Starts jumped a higher-than-expected 5.7% in April as the pace of new residential construction has picked up alongside improving buying conditions. Despite the increase, starts remain below last year’s level.

Sentiment—Both consumer and business sentiment reports remain extremely positive. Tariffs were not a significant factor; however, most of the responses were gathered before the collapse of US-China trade negotiations late last week.

The U.S. birthrate declined for a fourth consecutive year in 2018, falling to its lowest level in 32-years, with 3.79M births.