Nomura On labour Day Spending, And Evidence That Recession Fears Are Exaggerated

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Photo: LittleMissSilly, Flickr

From Nomura:The two high-frequency measures of consumption activity showed resilience in the week ending 10 September. Sales were stronger than retailers anticipated during the Sunday and Monday of the labour Day holiday weekend. The Johnson Redbook retail sales index stayed ahead of target, growing at 0.2% m-o-m (4.7% y-o-y mtd) vs. a target of 0.1% m-o-m (4.6% y-o-y). Discount stores continue to outperform department stores as consumers stock up on back-to-school items, sports equipment, and electronics. The ICSC-Goldman Sachs weekly chain store sales index increased 1.3% w-o-w and rose strongly to a rate of 3.3% y-o-y from 2.7% y-o-y the week prior.

The timely measures of spending, as well as employment (i.e., the Department of labour’s report of initial jobless claims), have not fallen off in recent weeks. We believe that recession fears have been greatly exaggerated (see US Roundup: “No ‘double dip'” 9 September 2011). Weekly sales did slow in the first few weeks of August when stock market volatility reached its highs. With this week’s report, we have seen a rebound and we expect a similar rebound to be reflected in September sentiment data, such as the University of Michigan/Reuters survey of consumer sentiment on Friday.

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