DE: Retail Sales

Tue Mar 03 01:00:00 CST 2015

Consensus Actual Previous Revised
Month over Month 0.4% 2.9% 0.2% 0.6%
Year over Year 2.6% 5.3% 4.0% 4.8%

Retail sales (ex-autos) were very strong at the start of the year. Following a larger revised 0.6 percent December increase, a 2.9 percent monthly rise was well above market expectations and lifted unadjusted annual sales growth from 4.8 percent to fully 5.9 percent, the fastest pace since June 2010.

January's monthly rise was the fourth in as many months and left real purchases some 3.4 percent above their fourth quarter average. Given the highly volatile nature of the data the latest figures should be treated with due caution but their recent trend is consistent with the sharp pick-up seen in consumer confidence since last October. Moreover, if the GfK survey is anything to go by, February (and probably March) will also be another good month for German retailers.

The apparent buoyancy of household demand should equate with a decent quarter for German economic growth and makes for upside risk to Friday's January industrial production report. It is also very good news for the rest of the Eurozone, particularly those member states such as France for which a decent boost to exports would be more than a little welcome.

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.