CA: Retail Sales

Fri May 22 07:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.3% 0.7% 1.7% 1.5%
Year over Year 3.1% 2.5% 2.4%

The retail sector closed out the first quarter on a surprisingly firm note. After February's downwardly revised 1.5 percent surge, monthly growth of 0.7 percent was well above market expectations and lifted annual growth of purchases from 2.4 percent to 3.1 percent.

However, the bulk of the increase in nominal demand was attributable to higher prices and volumes edged just 0.1 percent firmer versus mid-quarter.

The monthly gain in overall nominal sales was led by motor vehicles and parts which climbed 1.5 percent largely on the back of a 1.8 percent spurt in new vehicles. Excluding this sector total sales were up a more modest 0.5 percent. Elsewhere, food and drink advanced 1.3 percent, clothing and accessories 2.4 percent and health and personal care 1.7 percent. Partial offsets came via falls in general merchandise (2.4 percent), gasoline (0.5 percent) and electronics and appliances (0.2 percent).

Having already seen merchandise export volumes rise 1.9 percent and real manufacturing shipments jump nearly 3 percent, March's minimal monthly increase in retail sales volumes suggests that real GDP picked up some useful momentum at the end of last quarter. Nonetheless, earlier weakness probably means that total output over the quarter as a whole was still only sluggish and the outlook remains clouded by uncertainty surrounding the likely effects of the oil price slump.

As such, today's report should leave the BoC happy enough to keep policy on hold again at next week's interest rate meeting and, indeed, most probably over the rest of 2015.

Retail sales measure the total receipts at stores that sell durable and nondurable goods.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.

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 apparel sales are showing exceptional weakness but electronics sales are soaring. 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.