CH: Adjusted real retail sales

Fri Apr 17 02:15:00 CDT 2015

Actual Previous Revised
Y/Y % change -2.7% -0.3% -0.5%

Retail sales fell again in February. A 1.2 percent monthly drop followed January's steeper revised 2.6 percent slump and reduced annual workday adjusted growth from minus 0.5 percent to minus 2.7 percent.

Excluding auto fuel the picture was little better with volumes down 0.9 percent versus January when they fell 2.6 percent.

Purchases of food, drink and tobacco were off a monthly 1.7 percent after a 0.5 percent slide last time with non-food (ex-auto fuel) demand 0.9 percent weaker following a 3.6 percent nosedive at the start of the year

The latest figures put average total retail sales volumes in January/February some 2.2 percent below their fourth quarter mean. February alone saw the weakest level of sales in two years. The drop in discretionary spending at least moderated in February but a sizeable contraction over the first quarter as a whole looks all but certain. The economy most likely contracted at the start of the year and should the CHF break significantly higher once again, the risk of recession in the current quarter would become worryingly real.

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.