Retail sales — What to know in markets Friday

Thu, Sep 12, 2019, 3:31 PM

The U.S. consumer takes the spotlight Friday morning.

The consumer has shown to be rather resilient, even as other signs of a slowdown have emerged, and the ongoing trade war continues to rattle markets. Market watchers will get another read on the health of the consumer Friday when retail sales data for August is released.

Friday’s report comes at a critical time. With tariffs threatening the U.S. consumer, and and next week’s FOMC meeting, market participants will likely watch retail sales closely.

“Another solid report will be taken by the Fed as a signal that consumer spending is holding up in the face of global headwinds, and that the economy is not in much need of additional policy accommodation at this time,” Wells Fargo said in a note to clients last Friday. “A big miss, however, would raise concerns that consumer spending cannot sufficiently offset the headwinds from slower global growth and trade uncertainty, and add urgency for the Fed to ease policy further.”

Economists polled by Bloomberg expect retail sales to have risen 0.2% in August.

July’s strong retail sales data surprised investors. Economists are expecting more moderate growth in August. “After a strong increase in July, we expect headline retail sales growth to slow to 0.2% MoM in August,” Credit Suisse wrote in a note Thursday. “Ex auto and gas, we expect sales grew modestly at 0.2% MoM after rising an average of 0.7% in the past three months. Some of the expected slowdown is partial payback after extreme strength in online sales last month. Seasonal adjustments may not have fully adjusted for Amazon's 'prime day' sales, and a slowdown is likely after sales rose almost 3.0% in July.”

No notable corporate earnings reports are scheduled for Friday.