While some important economic reports are coming in the US this week, it will be the health of the under-pressure retailing sector that will be examined in a series of quarterly reports.
There’s the July consumer price inflation figures and the Fed’s favourite measure, PCE inflation and consumption data (Personal Consumption Expenditure figures), industrial production and various surveys of the economic activity from regional Federal Reserve offices.
But it will be the retail sales data on Thursday for July that will be looked for by the market. Analysts see another solid rise of 0.4% is forecast, but that reading could be a bit lower than in June’s 0.4%.
The past year has seen at least 50,000 jobs lost in US bricks and mortar retailing such as department stores with the likes of Macy’s leading the way.
Macy’s will be one of the US retailers reporting this week. Others include JC Penney, Walmart Inc and Tapestry Inc whose brands include Coach, Kate Spade, and Stuart Weitzman.
The following week department store chains, Kohl’s Corp, Target (TGT.N) and Nordstrom will all report.
This week also sees the start of the liquidation process at some stores owned by the bankrupt Sears Holdings.
Transform Holdco, the company formed in January to buy the remaining assets of Sears said on Friday it will begin “liquidation sales” next week in 26 stores that will close in late October.
The large-format store closures include 21 Sears stores in 15 states and 5 Kmart stores in 3 states and Puerto Rico.
Solid household consumption (and government spending) are helping keep the US economy afloat at the moment. Household consumption was up 4.3% in the second quarter from the weak 1.1% rate in the three months to March.
That’s being helped by solid wage growth – 3.2% in the year to July according to last week’s jobs and labour force data.
Other reporting include tech stocks such as Cisco and Nvidia Systems as well as agricultural machinery maker Deere and Co (which will report rotten figures). Barrick Gold is also down to report, along with Chinese groups Tencent and Alibaba.
On Friday, The University of Michigan’s preliminary August reading of consumer sentiment is out and expected to show a slight weakening,
US retailers are in the firing line of Trump’s trade war antics with China (he doesn’t care about the damage he is doing) and the latest threat to add 10% to existing tariffs on $US300 million of Chinese imports will force more and more retailers to answer the question of deciding whether to pass the tariffs on to consumers in the form of higher prices or absorb the higher costs, which will reduce profit margins.
