US PREVIEW: Retail Sales Seen Confirming Solid If Slightly Slower Q4 PCE (1/2)

The Census Bureau's delayed December advance retail sales report (Tuesday 0830ET release) is expected to see a deceleration in sequential headline growth with core remaining solid at end-year. Current Bloomberg consensus is for 0.4% M/M overall sales growth (0.6% prior), but ex-auto/gas at 0.4% (same as Dec) and the GDP-input Control Group rising 0.4% (again, same as prior). 

• November retail sales data were largely in line with consensus and solid on all counts, though October's very strong report was revised down to slightly less robust (but still quite strong) levels. It kept Q4 private consumption estimates elevated with little indication of a meaningful retail consumption slowdown toward the end of the year.
• Indeed with this report somewhat stale, the main interest is in solidifying PCE growth expectations for Q4 ahead of the GDP report release on Feb 20 (Atlanta Fed GDPNow tracks 3.07% Q/Q SAAR for overall consumption which would be a slowdown from 3.5% prior).
• January is shaping up as weaker than December in any case. But the January Census Bureau report remains unscheduled, so sticking with the report at hand: alternative indicators of retail sales point to a solid December figure.
• The Chicago Fed's CARTS estimate for retail sales growth ex-autos in December was revised up to 0.6% in its final report, from 0.4% prelim. This came after the official census Bureau release for November, which showed 0.5% ex-autos sales (CARTS had estimated 0.3%). On an unrounded basis this would be the strongest M/M reading since August, and mark a constant acceleration since a recent bottom of 0.1% in September.
• Retail sales rose by 6.8% Y/Y in December per the Johnson Redbook index, following a 7.1% Y/Y increase in the week ending Jan 3 (which marks the end of the retail month). This was the best month in Y/Y growth terms since December 2022 (all figures, like the Census Bureau's "official" retail series, are in nominal terms).
• As for overall sales, they should be boosted by a rebound in light vehicle sales to 16.02 million in December (on a seasonally-adjusted, annual basis in volumes) from 15.60 million in November, per Wards Automotive. That's the largest single category of monthly retail sales though isn't part of the Control Group; in November these rose 0.8% M/M in the Census Bureau series so Wards is pointing to another solid report.