US DATA: Chicago Fed CARTS Indicates Suddenly Waning Retail Sales Momentum

The Chicago Fed's Advance Retail Trade Summary (CARTS) showed a downward revision in its final estimate for January ex-autos retail sales, to -0.1% from +0.1% in the preliminary report. There's still no schedule for the release of Census Bureau January retail sales data but the CARTS update will only add to suggestions that core growth has slowed sharply in the last few months after December's official report badly missed expectations. * CARTS's estimate for December ex-auto sales proved too high, with the actual print of 0.0% well below the 0.6% CARTS. The miss appears to have also spilled into the downward revision for January. * Combined with the December "miss", the 3M/3M annualized ex-auto retail sales growth for January as implied by the CARTS series has been revised down to 2.4% from 4.5%. That would be the slowest implied quarterly nominal growth rate since April 2024 and well down from the recent peak of 5.8% as of end-Q3. * Inflation adjusted, that quarterly rate is barely positive (CARTS estimates -0.1% M/M in January, and the core CPI figure was close to 3% on a 3M/3M annualized basis in the month). * The CARTS prelim for February is out on March 9.

US DATA: Softening Homebuilder Sentiment Bodes Ill For Housing Start Recovery

For a second consecutive month in February, homebuilder sentiment as measured by the National Association of Homebuilders/Wells Fargo Housing Market Index (HMI) unexpectedly declined. The pullback to 36 from 37 prior (38 consensus) marked a 5-month low and the 2nd straight decline suggests any nascent momentum in homebuilder sentiment has halted (the NAHB had risen in each of the 4 months prior to January). * The present sales gauge was steady at 41 but prospective buyer traffic dipped to a 5-month low 22 (24 prior, and around the all-time low), with future sales also dropping to a 5-month worst 46 (49 prior). There was no improvement in activity in any of the US regions (3 of 4 declined, with the South steady at zero). * The NAHB characterizes the data as showing "Signs of Market Cooling", and points out that the latest survey shows "36% of builders cut prices in February, down from 40% in January. While this marks the lowest incidence of price-cutting since last May (34%), the average price reduction remains at 6%. The use of sales incentives was 65% in February, unchanged from January, and marking the 11th consecutive month this share has exceeded 60%." * In other words, weak affordability amid high house prices and still-elevated mortgage rates, combined with still-high new home supply in terms of months of sales, continues to put pressure on builders to provide incentives. * 2026 so far has thus seen a setback in confidence amid a residential real estate market that showed signs of thawing in the latter months of 2025, with sales picking up amid a dip in mortgage rates. The NAHB survey reflects single-family home construction sentiment and the pullback here suggests that housing starts/residential construction momentum will remain limited.

CANADA DATA: Upside Inflation Breadth Starting To Narrow, Goods Remains Elevated

January's CPI report showed a continuation in the divergence of inflation breadth between goods and services categories, even as core/underlying aggregate metrics continued to decelerate. The upside pressure isn't exactly narrow, but the reduction in outlying upside readings should provide some comfort that a broader surge in inflation isn't underway. * Overall CPI breadth showed close to 60% of all items rising at a higher-than-2% Y/Y clip, after 57% in December and marking a 24-month high. However just 46% was rising faster than 3% (down from 47%) while the share rising at 4+% was steady at 38%. The latter is still elevated but is related to base effects from the prior year's sales tax holidays that are causing outsized gains across multiple categories. * But there was a notable pickup the proportion of goods categories rising at 2+%, reaching 42% after 40% for a 24-month high, even with 3+% steady at 47%. This is above average and clashes with the overall subdued goods CPI aggregate readings showing fairly tame pressures, but again the jump the last 2 months is potentially base effect related (the share rising 4+% ricked up nearly 1pp to 28%, a 25-month high). This included a dropping out of the tax break for alcohol, toys, games, hobby supplies, and children's clothing. That said, several grocery food categories remained elevated Y/Y. * For services though the improvement in breadth metrics continued. The proportion of items rising 2+% was 17%, down from 18% prior for a 6-month low, while 3+% was 43% (12-month low, 46% prior) and 4+% 10% (4-month low, 11% prior). A lot of this is shelter and energy-related, both of which are providing a pretty sizeable disinflationary impulse (the latter on carbon tax-related negative base effects), though a few food service related categories saw offsetting base effects here.

CANADA DATA: Shelter Continues To Anchor Disinflationary Trends

Disinflationary progress was seen across several core CPI categories in January. Some of this is mechanical related to lower mortgage interest costs and the overall level of services ex-shelter inflation remains a little too high for comfort, but this is offset on aggregate by softer goods price inflation. * The biggest driver of disinflation once again was shelter costs: they rose by 1.7% Y/Y vs 2.1% prior and the first sub-2.0% reading since February 2021. Disinflation was recorded across major shelter sub-categories with owned (1.0%, 1.3% prior) and rented (4.3%, 4.8% prior) accommodation decelerating as well as water, fuel, and electricity (-0.1%, 0.3% prior). * The deceleration in mortgage costs is of course a key component (1.2%, 1.7% prior) as the lagged effects of BOC cuts comes into play, but this deceleration began in September 2023. Ex-mortgage interest inflation decelerated to 2.3% from 2.4%. Trim services ex-shelter prices came in at 3.1% Y/Y (3.2% prior) while ex-shelter inflation printed 2.5% Y/Y for a 2nd month. * Services inflation picked up to a 9-month high 3.4% from 3.3% prior, but this was related to higher Y/Y restaurant prices. * Indeed looking at the higher food inflation print (7.3% Y/Y, 6.2% prior), this was entirely driven by higher restaurant/takeout prices which were all in double-digits reflecting year-before tax holiday base effects. But grocery prices (11% of the overall CPI basket) actually decelerated after 2 months of acceleration, to 4.8% Y/Y after 5.0%. The BOC's been concerned about surging grocery prices on higher import costs so this may help alleviate concerns for one month at least. * StatCan pointed out a sharp deceleration in cellular services (4.9% Y/Y vs 14.6% prior) "due to a base-year effect, following six consecutive months of upward pressure" while we also note a solid pullback in the household operations/furnishings/equipment category (13% of CPI) to 2.5% (3.6% prior). * Goods price inflation printed 0.9% Y/Y, down from 1.2% prior for a joint 2-month low. This included a steady durable goods reading (2.0% after 1.9%, which had been the lowest since April), a 1.3% Y/Y semidurables print for a 2nd consecutive month, and 0.3% nondurables for a 5-month low (0.8% prior). Overall, trade-disruption related price pressures appeared tame. * Apparel prices (4% of CPI) stayed soft (0.8% Y/Y after 0.5%), with transportation (-17% of CPI) hitting the lowest since April 2025 at -1.7% (after -0.5%), and airfares/travel services were softer.