DE: Retail Sales

Wed Jan 07 01:00:00 CST 2015

Consensus Actual Previous Revised
Month over Month 0.2% 1.0% 1.9% 2.0%
Year over Year -0.8% 1.7% 2.1%

Retail sales were surprisingly firm in November. Following a marginally upwardly revised 2.0 percent jump in October (and a positive adjustment to September) volumes rose a further 1.0 percent on the month for their first back-to-back increase since January/February.

Adjusted sales were 3.1 percent above their 2014 low established at the start of the year and the level of sales in November was the highest since April 2007. Unadjusted annual growth dropped from October's 2.1 percent to minus 0.8 percent but this was biased down by working day distortions.

In fact, the latest figures put average purchases in October/November some 1.3 percent above their third quarter mean and so suggest that overall household consumption made a more than respectable contribution to real GDP growth last quarter. This would be consistent with the findings of recent Gfk consumer climate surveys and may help to relieve a little of the pressure on the Merkel government to adopt a more expansionary fiscal policy.

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.