Most economic data published last week in the U.S. were positive.
Nonetheless, the surprising and steep decline at the consumer sentiment index for March, to its lowest level in the last 15 months, led last Friday to a decrease in the yields of Treasuries.
There are mixed indications regarding personal consumption.
On one hand, there was the higher than expected increase in February at the volume of retail sales (sales excluding autos rose by a monthly rate of 1.0% versus an expected 0.5%).
The relatively sharp rise in sales is cheering given the tax increases at the beginning of the year, the February rise in gasoline prices and concerns from the implications of the automatic spending cuts from early March.
On the other hand, it is probable that these factors led to the steep decline at the University of Michigan’s consumer sentiment index for March.
We negatively note that the index dropped to its lowest level in more than 15 months and that the expectation component in the index decreases sharply, from a level of 70.2 to 61.7.
Indication regarding U.S. industrial sector were more uplifting.
The industrial production index rose during February by 0.7% (versus an expected +0.4%), and data from January were moderately updated upwards (From a 0.1% decrease to no change).
Furthermore, the industrial expectation survey for the New York area may have decreased slightly, but it remained at a relatively high level (+9.2 during March versus +10.0 in February).