A report from the Census Bureau this morning showed that Retail Sales rose 1.2% last month and that was not only a big comedown from June’s upwardly revised 8.4% growth rate, but also well below the forecast level of 2.1%. Without Autos, July sales rose 1.9%; better than the 1.3% forecast, but also a massive slowdown from the prior month’s upwardly revised 8.3%. The Control Group, without autos, gas stations, and building materials, rose 1.4% beating the estimate of just 0.8%. June’s results were revised from 5.6% to 6%. Also in the report, we learned that for the second quarter, Non-Farm Productivity leaped by 7.3% and that was a huge turnaround from Q1’s slip of minus 0.3%. Analysts only predicted an increase of 1.5%. Along with that growth in productivity came growth in costs as Q2 Unit Labor Costs soared by 12.2% against an expectation of only 6.9%. That measure for Q1 came in at 5.1% but was revised this morning to 9.8%. The size of the misses along with the size of some revisions point to the difficulty in capturing accurate data amid covid-19 protocols along with the unpredictability of consumer behavior.
More about consumers will be known later this morning when the University of Michigan releases its preliminary August report on Consumer Sentiment. In early trading, Treasury prices have edged up slightly after yesterday’s sell-off but the Ten-Year’s yield is still around 70 basis points. The Long Bond’s yield has edged up to about 1.43% as the yield curve’s slope has shown recent steepening. Crude oil is steady at around $42.20 while gold is off about $10 to $1,943. Dow futures look to open slightly in the red. Industrial Production and Capacity Utilization will be reported at 8:15 CDT.