US retail sales likely to increase on improved consumption prospects                                 

The United States retail sales for May is likely to rise on improved prospects of household consumption in recent months. This is despite dampened conditions across the economy and uncertainty over interest rates ahead of the Federal Reserve Open Market Committee meeting this week.

Headline total retail sales is expected to rise 0.5 percent in May, a mild rise from 1.3 percent in April. Meanwhile, ex-autos are expected to rise 0.5 percent m/m compared to the 0.8 percent m/m reading seen in April.

Purchasing decisions in the world’s largest economy have deteriorated since the onset of the financial crisis, coupled with sustained unemployment in the past quarters. However, recent economic data have raised hopes of a revival in the economy with rebound in employment  and increasing consumption over the course of 2016.

Total vehicle sales accelerated in May on an annual basis to 17.5 million at a seasonally adjusted annual rate, following 17.4 million in April which will continue to provide solid support. On balance, improved demand for retail items is expected to prevent further declines of any significant fashion from being posted in the first quarter of 2016.

Nevertheless, consumers are likely to remain in a tight situation as credit access remains constrained along with subdued housing market. A sluggish financial and economic growth in the economy is also likely to weigh on consumer pockets in the near term.