Fitch: US Jobs, Retail Sales, Support Credit Card ABS Metrics

NEW YORK--(BUSINESS WIRE)-- Continued improvement in the US job market should preserve credit card ABS metrics standing near record territory, Fitch Ratings says. Earlier this month, the Bureau of Labor Statistics (BLS) reported a new low in the national unemployment rate since the recession. Consumer sentiment also illustrated the correlation between these metrics to stronger retail sales. As performance has been near records in recent months, any potential declines in these macroeconomic factors are expected to leave ABS metrics robust.

The growth in jobs brought the US unemployment rate down to its lowest since February of 2008 at 4.9%, while the economy grew 151,000 in non-farm payrolls in January, according to BLS. Higher employment encourages consumer spending and can affect the payment patterns of a majority of credit card borrowers.

Fitch also observes correlation between credit card metrics and retail sales. This month, the Commerce Department reported a rise of 0.6% in retail sales (excluding automobiles, gasoline, building materials and food services) in January after declining by 0.3% the previous month. BLS also reported that though consumer sentiment fell 1.3 points lower than expected to 90.7, it remains above last fall's levels.

Fitch's prime chargeoffs are projected to marginally decrease after rising for four straight months while Prime 60+ day delinquencies are expected to rise slightly. Prime gross yield and monthly payment rate (MPR), which hit an all-time high last month, will decline.

Retail chargeoffs, gross yield and MPR are likely to decrease but all remain in a healthy range. 60+ day delinquencies should increase slightly.

This preliminary data reflect the January reporting period (as of January 29, 2016) and February distribution date. Actual results will be available in early March.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

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View source version on businesswire.com: http://www.businesswire.com/news/home/20160224005882/en/

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Source: Fitch Ratings

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