USDJPY, H1
US retail sales plummeted another -16.4% 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 CORE measure declined -17.2% 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%).
A glimmer of hope came from the once all-important US Empire State manufacturing index, as it improved 29.7 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.
The Dollar edged slightly lower after the dismal retail sales print, taking USDJPY to 106.85 from under 107.05, and EURUSD to 1.0807 from 1.0795, Cable remains anchored below 1.2200, but up from new 7-week lows at 1.2149 earlier.
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Stuart Cowell
Head Market Analyst
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