Synopsis:

Morgan Stanley expects flat US retail sales in April, with auto sales declining and restaurant spending rebounding. Industrial production is forecast to rise 0.4% month-over-month, driven by a surge in utility output, while manufacturing shows signs of fatigue.

Key Points:

• Retail Sales:

  • Headline and control group sales: Expected to show no change in April.

  • Auto sales: Forecast to fall by 1.0%M.

  • Restaurant spending: Expected to rebound by 1.0%M.

  • Broader goods categories likely see muted activity.

• Industrial Production:

  • Headline IP: Projected to rise 0.4%M, lifted by increased utility usage.

  • Manufacturing output: Seen falling 0.1%M overall.

  • Non-auto manufacturing: Expected to decline 0.2%M, ending a recovery trend since November.

  • Despite April softness, non-auto factory output is up 1.9%Y, the strongest annual pace since 2022.

Conclusion:

April data may point to cooling momentum in US consumer and manufacturing activity. While utility demand props up overall industrial production, underlying weakness in manufacturing and flat retail sales could raise questions about the strength of Q2 growth.