The volume of retail sales in the US rose by 0.2% in the month of July. Core sales rose by 0.8%. Retail sales were expected to rise by 0.3%, and core sales by 0.4%. On the other hand, last month’s drop was revised to the downside: -0.7% instead of -0.5%.
Prior to the release. EUR/USD was trading steadily in range at around 1.2350. USD/JPY was drifting higher to around 78.60. USD/JPY now extends its rise and trades towards 78.90. EUR/USD ticks up. Update: EUR/USD changed direction and is now falling. The dollar is stronger across the board.
PPI rose by 0.3% and core PPI by 0.4%. The producer price index (PPI) was expected to rise by 0.3% and core PPI by 0.2%. So, both figures are a bit above expectations.
According to Gary Shilling, when there are 3 consecutive months of drops in retail sales, the US economy is either in recession or within 3 months of a recession. This was true in 27 out of 29 such streaks since data collection began in 1947.
The US economy is driven by consumption. Recent trade data showed a significant drop in oil imports. This data will likely boost GDP when data is revised for Q2. However, consumer spnding is far more important. So, is the US on the brink of or already in recession?
The strong rise in sales implies that the answer is not certain.
Earlier, the euro-zone reported a contraction of 0.2% in Q2, as expected. Contraction comes despite strong German growth.
