U.S. Retail Sales Rise in January, Stabilizing After a Slump
U.S. retail sales stabilized in January after a plunge the prior month that was larger than first reported, indicating consumers may still be able to help support growth after a dismal end to 2018. The value of overall sales rose 0.2 percent after a 1.6 percent drop in the prior month that was the steepest since 2009, Commerce Department data showed Monday. The median forecast in Bloomberg’s survey called for an unchanged reading. Sales in the “control group” subset, which some analysts view as a cleaner gauge of underlying consumer demand, rose 1.1 percent, topping estimates after a 2.3 percent drop in the prior month. The measure excludes food services, car dealers, building-materials stores and gasoline stations. The stronger-than-expected report should ease concern about consumer strength after a surprisingly weak December that was likely hurt by the government shutdown and seasonal factors. Higher wage gains and a robust labor market have supported spending, the largest part of the economy, and fresh strength bodes well for it to continue buoying growth in the first quarter, though a downward revision for December sales excluding autos and gas brought that decline to the biggest since September 2001. Eight of 13 major retail categories showed improvement. The gains reflected the biggest jump for building materials since late 2017, the best rise for food and beverage stores since early 2016 and the strongest gain for sporting goods and hobby stores since 2013.
High Debt Is a Problem for Euro, Says Debt-Averse Czech Republic
Euro-zone countries’ public debt piles are threatening to handcuff policy makers in the bloc as they brace for an economic slowdown, according to the head of the Czech central bank. Governor Jiri Rusnok, whose country is obliged to join the single currency along with most other European Union states that aren’t currently members, said debt levels that have risen since the global financial crisis had left governments with “limited” room to juice growth via fiscal stimulus. “The euro zone, or some of its less successful parts, aren’t in very good condition,” Rusnok told the weekly Euro magazine in an interview published Monday. “A huge problem is the long-term, almost 20-year-long, stagnation of Italy. If it starts to grow, it will be out of trouble very soon. But it isn’t growing, and it’s the third-largest economy in Europe if we don’t count the U.K. ” Rusnok’s comments come on the heels of Czech Prime Minister Andrej Babis’s rejected of euro-area membership earlier this month. More than 70 percent of Czechs are against joining the euro, a 2018 survey by Eurobarometer showed, and policy makers here have long touted the country’s low debt, independent monetary policy and koruna as factors that make it resilient to the woes facing the single currency. The European Central Bank’s new projections show growth in the euro zone slowing this year to just 1.1 percent, down from December’s 1.7 percent prediction.
U.S., China Have Reached Consensus on Many Vital Issues, Yi Says
China and the U.S. have reached consensus on many “crucial” issues and and have discussed the need to observe the “autonomy” of each other’s monetary policy, People’s Bank of China Governor Yi Gang said. “The two sides discussed issues surrounding the yuan including the need to abide by previous commitments made by Group of 20 nations not to engage in competitive depreciation and to communicate closely on currency issues,” Yi said during a press conference in Beijing Sunday during the annual National People’s Congress. He didn’t say on which issues they had reached consensus. The negotiators also discussed the importance of a market-orientated foreign exchange mechanism and the need to disclose information to International Monetary Fund standards, Yi said. He has been part of the Chinese team at the trade talks. The issue of currency manipulation has become part of the ongoing talks to solve their trade confrontation, with the U.S. pushing for a pledge by China to not devalue its currency as a way to gain competitiveness or offset the effect of tariffs. China has said that any deal to end the trade spat should be “two way, fair and equal.” The PBOC has “basically exited” daily intervention in the foreign exchange market, Yi said, reiterating the existing intention to keep the yuan “basically stable” at “reasonable equilibrium.” China will “never” use the exchange rate for competitive purposes, to increase exports or to solve trade disputes, he said.
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