CA: Retail Sales

Fri Jun 19 07:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.5% -0.1% 0.7% 0.9%
Year over Year 1.7% 3.1% 3.2%

Following successive rises in February and March retail sales lost ground in April. A 0.1 percent monthly decline was comfortably weaker than expected and meant that, compared with a year ago, purchases were up only 1.7 percent, well short of the upwardly revised 3.2 percent annual rate posted last time.

Moreover, price rises had a small positive impact on nominal demand and without the benefit of these sales would have fallen 0.2 percent on the month.

Within the monthly decline in total nominal sales there were falls in four of the eleven subsectors. The main areas of weakness were electronic and appliances (minus 8.8 percent) and food and beverages (minus 1.3 percent). Gasoline was also off 0.5 percent. Indeed, but for strength in motor vehicles and parts (1.3 percent) sales would have decreased 0.6 percent. Other sizeable rises were recorded in building material and garden equipment and supplies (0.8 percent), clothing and accessories (1.3 percent) and sporting goods and hobbies (0.7 percent).

Although exporters had a decent period, falls in both real retail demand and manufacturing sales volumes together with a sizeable decline in employment suggest that April was not a good month for the economy. That said, early evidence of May has been significantly more upbeat and a return to modest GDP growth over the second quarter as a whole still looks very likely. BoC policy remains firmly on hold.

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.