CH: Adjusted real retail sales

Fri Feb 06 02:15:00 CST 2015

Consensus Actual Previous Revised
Y/Y % change 0.4% 2.2% -1.2% -0.6%

Retail sales were strong in December. A 1.0 percent monthly rise in volumes, their best performance since August, followed an upwardly revised 0.6 percent increase in November and boosted annual workday adjusted growth from minus 0.6 percent to 2.2 percent.

Moreover, the year-end bounce was attributable to buoyant discretionary spending as excluding auto fuel, non-food purchases were up fully 1.9 percent versus November when they expanded 0.4 percent. Sales of food, drink and tobacco climbed 0.8 percent.

The December update provides for a fourth quarter increase in overall retail sales volumes of 1.1 percent which should bode well for the period's real GDP growth. However, as yesterday's SECO consumer climate survey indicated, household confidence looks to have deteriorated quite sharply since the SNB's abandonment of its FX policy in the middle of last month and at least a partial reversal seems likely in the next set of figures.

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.