CH: Adjusted real retail sales

Mon Mar 16 03:15:00 CDT 2015

Actual Previous Revised
Y/Y % change -0.3% 2.2% 1.9%

Retail sales were very weak in January. A 2.1 percent monthly fall easily more than reversed December's downwardly revised 0.8 percent gain and left workday adjusted purchases 0.3 percent lower on the year after a 1.9 percent increase last time.

January's monthly decrease was the steepest since last July but would have been sharper still but for a mild 0.1 percent dip in sales of food, drink and tobacco. Excluding auto fuel, purchases of non-food items collapsed some 4.1 percent to hit their lowest level since March 2013.

Overall sales in January were a hefty 1.3 percent below their average level in the fourth quarter of 2014. This increases the likelihood of first quarter real GDP growth falling back below zero for the first time since the third quarter of 2011. On Thursday the SNB will present its quarterly Monetary Policy Assessment. A much more sombre outlook is guaranteed in its updated economic projections.

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.