US Retail Sales Crater & Empire State Improves

<h3>USDJPY, H1</h3>
<p>US retail sales plummeted another <strong>-16.4%</strong> in April and dropped -17.2% excluding autos, to all-time lows. The April data picked up much of the full extent of the economy’s closures. These follow the -8.3% (was -8.7%) headline decline in March and the -4.0% (was -4.2%) decline in ex-autos. Excluding autos, gas, and building materials, the “control” key <strong>CORE measure declined -17.2%</strong> after sliding -2.9% (was -3.5%) previously. Weakness was broadbased, with only one category, non-store retailers, rising 8.4% after a 4.9% prior gain (was 3.1%). Leading the headline weakness were clothing sales, which plunged a gaping -78.8% from -49.4% (was -50.5%). Gas station sales slid -28.8% from -16.5% (was -17.2%), hit by both the drop in gas prices and the travel restrictions. Motor vehicles and parts sales declined -12.4% from -25.7% (was -25.6%). Furniture was down -58.7% from -21.1% (was -26.8%). Sporting goods tumbled -38.0% from -17.8% (was -23.3%). Department store sales dropped -28.9% from -22.2% (was -19.7%). Food/beverage sales declined -13.1% after rising 26.9% (was 25.6%). Also, sales at eating and drinking establishments were down -29.5% versus -29.7% (was -26.5%). Health and personal care sales fell -15.2% from a 5.0% gain (was 4.3%).</p>
<p>A glimmer of hope came from the once all-important US Empire State manufacturing index, as it <strong>improved 29.7</strong> points to -48.5 in May following the record -56.7 point drop to a historic low of -78.2 in April. New orders firmed to -42.4 from -66.3. The employment component jumped higher to -6.1 from -55.3, with the workweek rising to -21.6 versus -61.6. Shipments were firmer at -39.0 from -68.1. Prices paid dipped to 4.1 after dropping to 5.8 previously, with prices received edging up to -7.4 from -8.4. The 6-month general business index climbed to 29.1 after rising to 7.0 in April. The future orders index rose to 35.0 versus 11.7, with employment better at 10.4 from 5.2. The 6-month prices paid index moved higher to 20.3 from 14.9 and prices received rose to 2.0 compared to 0.6. Capex was modestly less negative at -8.1 from -11.0, and technology spending moved upwards to -8.1 from -11.0.</p>
<p>The <strong>Dollar</strong> edged slightly lower after the dismal retail sales print, taking <strong>USDJPY</strong> to 106.85 from under 107.05, and <strong>EURUSD</strong> to 1.0807 from 1.0795, <strong>Cable</strong> remains anchored below 1.2200, but up from new 7-week lows at <span><strong>1.2149</strong></span> earlier.</p>
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<p><strong>Stuart Cowell</strong></p>
<p><strong>Head Market Analyst</strong></p>
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