The US Dollar is modestly higher this morning after a series of strong economic data points pointed to an improving labor market and rebounding consumer spending.
While the data points themselves had limited impact on the greenback, the “big dollar” is up about 0.03% on trade-weighted basis, bucking a two-week trend of weakening after peaking at just above 93 in late March.
According to the US Census Bureau, US retail sales soared an impressive 9.8% to $619.1 billion in March – completely shattering market expectations set near 6%. February’s decline was revised to -2.7%.
A vaccination campaign averaging nearly 3 million vaccination doses per day – according to the current 7-day moving average – coupled with new economic stimulus worked to imbue American consumers with enough confidence and cash last month to head out en masse to spend in retail outlets.
Although roughly 10 million Americans remain unemployed or have exited the workforce entirely, pent up demand last month propelled restaurants, motor vehicles outlets, clothing stores and sporting goods stores to post robust double-digit increases.
When compared to this time last year, retail trade activity is nearly 28% higher. Only grocery stores posted year-over-year losses, with a decline of 13.8% when compared to the temporary boost in sales witnessed in March 2020 when consumers rushed in droves to grocery stores to stock up on essentials as the pandemic began.
Today’s figures are in line with consumer inflation data from earlier this week, which highlighted the biggest single month jump since 2012. In the past, a large jump such as this would signal to the Federal Reserve that it was time to tighten its monetary policy belt. However, the Fed has shifted to viewing inflation as a symmetric goal around 2%. It now aims to have inflation hit 2% on average before raising rates or considering significant tapering to its existing monthly asset purchases of $120 billion.
First time claims for initial jobless benefits reached a new post-COVID low, falling to 576,000 – not only below the elusive 700,000 level, but also breaching the 600,000 mark for the first time in well over a year.
Claims figures remain highly elevated but are now well below pre-pandemic records. Preliminary data indicate most declines in claims last week came from the California, which has benefited from a vast and far reaching re-opening effort in recent weeks.
In contrast, the pace of change in continuing claims reversed course, rising 4,000 during the week ending April 3 – probably reflecting a delayed reaction to the back and forth in new claims filed over the last month.
This morning’s data is the last large, market moving piece of economic data due this week. As we move into the next week, all eyes will likely focus on corporate earnings and central bank decisions in Canada and continental Europe.
Market Strategist & Fintech Specialist
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