CH: Adjusted real retail sales

Fri Jan 16 02:15:00 CST 2015

Actual Previous Revised
Y/Y % change -1.2% 0.3% 0.6%

Retail sales rose 0.2 percent on the month in November after an upwardly revised 0.3 percent increase in October. However, annual workday adjusted growth was minus 1.2 percent, down sharply from a 0.6 percent print last time.

In addition, November's modest monthly increase in volumes masked a second successive fall in discretionary demand as, excluding auto fuel, non-food purchases followed October's 0.4 percent drop with a 0.1 percent slide. Sales of food, drink and tobacco were just 0.1 percent higher after a 0.7 percent bounce at the start of the quarter.

Average total sales in October/November were 0.4 percent above their third quarter average which bodes well for a positive contribution from overall household spending to real GDP growth last quarter. However, non-auto fuel volumes over the same period were marginally lower and November alone recorded their weakest level since July.

Moreover, the fallout from yesterday's shock about turn in the SNB's FX policy adds to uncertainty about the near-term outlook for consumption. The prospect of lower inflation from a stronger exchange rate might normally be positive for household demand but with prices already down on the year, enhanced deflation risks could have exactly the opposite effect. The SNB faces an even more challenging time than ever.

The data are provided in both nominal and volume measures; the latter is the more important for financial markets. The headline figure is the annual growth in sales volumes adjusted for differences in trading days. Seasonally adjusted monthly changes are also provided. Details are limited in the first estimate but a more complete picture is provided with the following month's release.

Consumer spending accounts for a large portion of the economy, so if you know what consumers are up to, you will have a pretty good idea on where the economy is headed. Needless to say, that is a big advantage for investors. 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.