Forex Flash: US February consumer spending and retail sales to improve – TD Securities

TD Securities analysts expect US February consumer spending to advance strongly and better than expected retail sales, as well: “The surge in gasoline prices should push total consumer spending up sharply in February, and we expect retail sales to rise at an above consensus 0.8% m/m”, wrote analyst Alvin Pontoh, looking for stronger autos to bolster the top line, and sales ex-autos are expected to rise at a slightly more modest 0.7% m/m pace (consensus 0.5%).

“However, with gas and autos accounting for almost all of the gains in spending, we look for core retail sales to rise at a more modest 0.2% m/m pace in line with consensus expectations, suggesting a relatively subdued tone in underlying spending momentum”, Pontoh continued, expecting relatively soft personal spending in the next few months “as the hit from higher taxes and impact of sequestration lower take-home pay, and possibly spending momentum”.