Goldman Cuts Its Q2 GDP Estimate Again To 1.1%, Just Above "Stall Speed"
Just as we speculated less than an hour ago, here comes Goldman with its take of retail sales and its impact on GDP: "Retail sales decline more than expected in June. We revised down our Q2 GDP tracking estimate by two tenths to +1.1%. The Empire manufacturing survey rebounded somewhat in July although the details were mixed."
Weak Retail Sales; Mixed Empire Index; Q2 GDP Tracking 1.1%
BOTTOM LINE: Retail sales decline more than expected in June. We revised down our Q2 GDP tracking estimate by two tenths to +1.1%. The Empire manufacturing survey rebounded somewhat in July although the details were mixed.
1. Retail sales declined by 0.5% (month-over-month) in June, while the consensus had looked for a 0.2% gain. Key details of the report were also weaker: non-auto retail sales declined by 0.4%, and growth in April was revised down. Similarly, “core”/control retail sales (ex-autos, gasoline and building materials) was weak, declining 0.1% in June. The weakness reflected lower sales across a variety of categories, including general merchandise stores, electronics, furniture, sporting goods stores, and health and personal care retailers. Merely food and beverages, clothing, and non-store retailers posted gains on the month. The report was a negative for our tracking estimate of Q2 GDP growth, which we reduced by two tenths to 1.1%.
2. The New York Fed’s monthly Empire manufacturing survey rebounded somewhat to 7.4 in July, from a 2012 low of 2.3 in June. However, the details were mixed. The new orders index fell to -2.7 from +2.2, and the unfilled orders index to -13.6 from -5.2. Better news came from the shipments and number of employees components (+10.3 and +18.5 respectively). Input and output price pressures look benign.