Key U.S. Data Releases and Events

Next week, however, there will be some degree of a reality check, as September retail sales are expected to have fallen back sharply in a post "cash-for-clunkers" hangover, and early-October consumer sentiment likely retraced some of the strong gains reported in September.

Industrial production is nevertheless expected to have forged ahead in September, as motor vehicle production picked up sharply in response to the severe depletion of auto inventories caused by the "cash-for-clunkers" sales surge in July and August. Manufacturing production is expected to have jumped nearly 6% in the third quarter, a sharp reversal from a 9.0% decline in the second quarter

KEY U.S. DATA RELEASES THIS WEEK

Wednesday, October 14 – Retail Sales (Sep.)

Total

• IHS Global Insight: -2.3%
• Consensus: -2.1%
• Last Actual: +2.7% (Aug.)

Less Autos

• IHS Global Insight: +0.3%
• Consensus: +0.2%
• Last Actual: +1.1% (Aug.)

What to Look For

• Retail sales fell an estimated 2.3% in September, pulled down by a setback in automotive sales.

Implications

The end of the "cash for clunkers" program caused unit sales of light vehicles to retreat from an annual rate of 14.1 million in August to 9.2 million last month. Excluding autos, sales advanced an estimated 0.3%, building on a strong 1.1% advance in August. A late Labor Day may have helped extend the back-to-school shopping season. The chain-store sales report indicated strength at drug stores, warehouse clubs, and department stores. With employment still declining, the recovery in consumer spending is likely to be uneven in the months ahead.

Thursday, October 15 – Consumer Price Index (Sep.)

Total

• IHS Global Insight: +0.2%
• Consensus: +0.2%
• Last Actual: +0.4% (Aug.)

Core

• IHS Global Insight: +0.2%
• Consensus: +0.1%
• Last Actual: +0.1% (Aug.)

What to Look For

• Top-level consumer price index is expected edge 0.2% higher in September.
• The core is expected to pick up a little due to a post-"cash-for-clunkers" bump in new vehicle prices.

Implications

The movements of gasoline, fuel oil, and electricity prices were generally muted last month and are only projected to lift the energy category 0.2% higher. Food prices were also quiet, and likely averaged slightly lower during September. Excluding food and energy, core consumer prices should be up 0.2%, after increasing 0.1% in August. The key reason is that new vehicle prices should rise with the expiry of the "cash-for-clunkers" incentives.

Friday, October 16 – Industrial Production (Sep.)

• IHS Global Insight: +0.4%
• Consensus: +0.1%
• Last Actual: +0.8% (Aug.)

What to Look For

• Industrial production is expected to climb 0.4%.

Implications

Most of the gain in September came from a sharp rise in motor vehicle production. We expect another double-digit rise in unit vehicle production, the third consecutive large gain—but probably the last one this year. The rest of manufacturing probably stayed in the black even though aggregate hours-worked fell 0.5%, because manufacturing productivity gains in the third quarter have been massive. Productivity overall continues to expand at exceptional rates, and this is providing not only a solid lift to corporate earnings, it is also keeping a lid on inflationary pressures.

Friday, October 16 – Michigan Consumer Sentiment Index (Preliminary Oct.)

• IHS Global Insight: 70.0
• Consensus: 73.5
• Last Actual: 73.5 (Final Sep.)

What to Look For

• The Reuters/University of Michigan's Index of Consumer Sentiment is projected to dip from 73.5 in September to 70.0 in early October.

Implications

We expect a "reality check" in early October, after a strong increase in September. News of continuing job losses, a rising unemployment rate, weak wage gains, and a falling dollar are expected to dampen some of the recent enthusiasm about the emerging economic recovery.