The Day at a Glance | August 17 2021

The Top

*Retail sales in the US fell more than expected.

*Employment in Europe increased 0.5% during the 2Q21; GDP growth set at 2%.

*A month of strong progress in employment could be enough to announce the withdrawal of the purchasing program in September: Eric Rosengren, Boston FED.

*The labor market`s recovery continues in the UK (4.7% June).

*Financial cost of debt in Mexico decreased (-) 10.1% during the first semester of 2021, the largest fall since 2008.

Economic environment

Consumption in the United States contracted during July. The most recent retail sales figures in the United States confirmed a 1.1% contraction during July (June`s figure was revised upwards to 0.7% vs 0.6%). The contraction was larger than estimated (-0.3%) and was widespread as the least volatile component of sales contracted (-) 0.4% and didn`t grow 0.1% as forecasts had expected. The largest contractions were seen among vehicles (-3.9%), e-commerce (-3.1%) and apparel (-2.6%); these had previously recorded strong growth in recent months due to fiscal stimuli, while growth starts to reflect greater consumption of services. The data suggests that consumption has started to become more moderate after the end of stimuli and continues to normalize. However, data in the following months will be important as it`s feared that the virus`s new wave could decrease Americans` willingness to spend. The most recent consumer sentiment indicator published by the University of Michigan showed an important contraction at the start of August by setting at its lowest level since 2011. If the drop in consumer confidence translates into less spending, this could slow down the economy even more.