On Thursday evening Beijing time, the US Department of Commerce Census Bureau released retail data for January, with a month on month decrease of 0.8% significantly weaker than market expectations (ranging from -0.1% to -0.3%). At the same time, retail data for December last year was also adjusted from a positive growth of 0.6% to 0.4%.
(Source: US Department of Commerce) From the report's sub items, it can be seen that American merchants have generally ushered in a new year with no bright performance: even after deducting the well-known weak automotive retail, retail data in January still decreased by 0.6% month on month (market expectation for growth of 0.2%). Among them, sales of construction and horticulture decreased sharply by 4.1% month on month, sales of grocery stores decreased by 3%, sales of automobiles and parts decreased by 1.7%, and retail sales of gas stations also decreased by 1.7%.
The retail data in the United States will be adjusted for seasonal factors, but there is no inflation adjustment mechanism, so the decline in gas station retail sales also includes the impact of falling gasoline prices.
The path of interest rate cuts has not changed much
After the data was released, the CME "Federal Reserve Watch" tool showed that there was almost no change in the expected probability of not cutting interest rates in March in market pricing, and the probability of not cutting interest rates in May slightly decreased from 61% to 57%. June is still the time when the market pricing expects the Federal Reserve to start cutting interest rates, and the expected change is not significant.
Why is the expectation of interest rate cuts not moving despite poor economic data?
Firstly, economic data itself is also pulling on each other. On Tuesday, the US Department of Labor's CPI data showed that the unadjusted CPI for January increased by 3.1% year-on-year, while the core CPI remained at 3.9%, with little change in the past few months. The month on month growth rate (0.4%) reached the largest increase since May last year.
The annual rate of core CPI in the United States, sourced from tradingeconomics, also announced on Thursday that the number of initial claims for unemployment benefits (as of the week ending February 10) decreased by 8000 compared to the previous revised value. Moving forward, the January non farm payroll in the United States also exceeded expectations.
More importantly, Federal Reserve Chairman Powell has always emphasized that "we need to look at a series of data, not one month's data.". January was a month of intense turbulence in the retail market - the Christmas shopping season in December last year had just ended, and consumers' wallets were still in a state of recovery.
In addition, bad weather seems to have become a bearish factor for retail data. In January of this year, many regions in the United States experienced cold and humid weather caused by strong cold air, which hindered consumers from going out and spending money. According to data from the Bank of America Research Institute, in January of this year, credit card and debit card consumption in the western region of the United States, which had better weather, showed a year-on-year increase, while consumption in other areas with poor weather showed a downward trend.