DE: Retail Sales

Fri May 29 01:00:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 1.0% 1.7% -2.3% -1.4%
Year over Year 2.5% 1.0% 3.5% 4.3%

Following a smaller revised, but still sizeable, 1.4 percent slump in March, retail sales returned to positive monthly growth in April. A 1.7 percent increase, the first rise since January, was stronger than expected and the largest since October 2014, but still saw unadjusted annual growth slide from 4.3 percent to 1.0 percent due to calendar distortions.

Compared with their first quarter average, purchases in April were 0.7 percent higher and so point to a solid start by consumer spending to the second quarter.

It was a 0.8 percent advance in household spending that provided the principal support for a modest 0.3 percent gain in first quarter real GDP. Today's data mean that the current quarter has started on a positive note and, as Wednesday's GfK update made clear, overall consumer sentiment and buying intentions are still at historically high levels. Indeed, consumer confidence would still appear to be rising. As such, private consumption looks likely to remain a major contributor to a sustained economic upswing over the remainder of 2015.

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.