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The best way to look at both US payrolls and retail sales may be from a longer-term perspective

Markets expect a hefty 0.3% (MoM, sa) rise in retail sales in October, mainly, it seems, because growth in the previous two months was zero and not even the bears thinks the economy is doing that poorly. Consensus looks for 0.4% rise in 'control group' sales for basically the same reason. It's not a reassuring sort of forecast - calling for strength because the data have been so weak - but it worked for payrolls last week so it might work for retail sales tomorrow. Time will tell. 

The best way to look at both payrolls and retail sales may be from a longer-term perspective. Even with the surge in private sector payrolls to 268k in October, the trend looks no different from the past 4.5 years. Two months at the bottom of the range were complemented by one near the top. It's decent growth, on average, if it holds. Payrolls will look 75k / month weaker going forward thanks to the drop in exports and job growth in goods producing industries. But it may take a while before that signal can be seen through the noise. For now, the Fed will be very pleased indeed with the October numbers. 

The trend in retail sales is less strong. Even with the bounce-backs in October that markets expect, on-year growth has slipped considerably from the pace of 2014. Control group sales growth dropped to 2.9% on-year in September and markets think it will drop further to 2.7% in October. That's a full point, or more, below where it was a year ago. It won't keep the Fed from hiking rates in December, but it won't be driving much inflation in 2016 either.

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