|Y/Y % change||-2.8%||-2.7%|
Retail sales rebounded 0.7 percent on the month in March following a smaller revised 0.9 percent decline in February. However, annual growth of purchases was still strongly negative at minus 2.8 percent.
Overall demand was hit by continued weakness in the food, drink and tobacco sector where sales were down 0.8 percent versus February, their third consecutive monthly decline. More optimistically, excluding auto fuel, non-food demand climbed a solid 1.3 percent although even this came nowhere close to reversing the cumulative slump of more than 5 percent in January/February. Indeed, over the first quarter as a whole, total sales were down some 2.4 percent versus their level in October-December.
Despite their monthly gain, the March sales data simply confirm what has been a dismal start to the year for the Swiss retail community. Real GDP probably contracted over the period and while more recent indicators have hinted at some stabilisation in the economy since then, the near-term outlook remains very soft.
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.
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