CA: Retail Sales

Fri Jan 23 07:30:00 CST 2015

Consensus Actual Previous Revised
Month over Month 0.0% 0.4% 0.0%
Year over Year 4.8% 4.9% 4.8%

Retail sales followed an unrevised flat performance in October with a stronger than expected 0.4 percent monthly rise in November. Compared with a year ago purchases were up 4.8 percent, matching the previous period's annual advance.

Volumes were a good deal firmer, registering a 0.8 percent monthly gain that left them 3.5 percent above their level in November 2013.

The monthly increase in overall nominal sales reflected rises in five of the eleven subsectors. Amongst these, unseasonably cold weather helped clothing and footwear increase fully 5.2 percent and furniture and home furnishings gained 1.5 percent. Sporting goods, hobby, book and music stores as well as electronics and appliance stores were up 4.6 percent and general merchandise advanced 2.0 percent. However, motor vehicle and parts dipped 0.3 percent, building material and garden equipment and supplies were off 1.1 percent and food and beverage dropped 0.5 percent. Miscellaneous store retailers also posted a 1.5 percent decline.

Having already seen real manufacturing shipments decline some 1.4 percent on the month and export volumes slide a still steeper 1.6 percent, the pick-up in price adjusted retail sales makes for a slightly firmer impression of November GDP. The BoC's new MPR estimated fourth quarter real GDP growth at an annualised 2.5 percent; today's sales figures leave this looking broadly on track but, if anything, still with some downside risk.

Retail sales measure the total receipts at stores that sell durable and nondurable goods.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.

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 apparel sales are showing exceptional weakness but electronics sales are soaring. 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.