DE: Retail Sales

Fri Jan 30 01:00:00 CST 2015

Consensus Actual Previous Revised
Month over Month 0.3% 0.2% 1.0% 0.9%
Year over Year 4.0% -0.8% -1.0%

Retail sales ended 2014 on a relatively soft note with volumes up a slightly smaller than expected 0.2 percent on the month after a marginally downwardly revised 0.9 percent increase in November. Annual growth was 4.0 percent, a sharp improvement on the previous period's 1.0 percent drop and the fastest pace since June 2012 but flattered by highly favourable base effects.

Purchases have now been on the rise for three consecutive months and while December's gain was easily the weakest, fourth quarter sales still advanced an impressive 1.1 percent versus the third quarter when they edged up just 0.1 percent. This suggests that overall household spending should make a solid contribution to the period's real GDP growth.

Moreover, if recent surveys of consumer confidence are anything to go by, consumption will continue to expand at a healthy rate this quarter too. If so, the Bundesbank is likely to become all the more unconvinced by the ECB's decision last week to adopt QE.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data are compiled from about 27,000 retail businesses and are reported in both nominal and volume terms.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. Both the Federal Statistical Office and the Bundesbank publish retail trade data. Until recently, there were vast differences between them, primarily because they each used a different seasonal adjustment program. This difference ended when the Statistical Office began using the U.S. Census Arima X12 methodology as well as their Berlin method. Another difference is that the Federal Statistical Office data are generally for total retail sales while the Bundesbank data features sales excluding autos and petrol stations or excluding only autos. The data here are for total retail sales.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps auto sales are especially strong or apparel sales are showing exceptional weakness. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.