CH: Adjusted real retail sales

Mon Jun 15 02:15:00 CDT 2015

Consensus Actual Previous
Y/Y % change -2.2% 1.6% -2.8%

Retail sales rebounded surprisingly sharply in April. Following an unrevised 0.7 percent rise in March, the first increase of the year, real purchases jumped fully 2.1 percent on the month, their best performance since June 2014. Annual workday adjusted growth was 1.6 percent, a significant improvement versus March's 2.8 percent drop.

Moreover, the monthly headline bounce was largely attributable to strength in discretionary spending and, excluding auto fuel, non-food sales climbed fully 3.9 percent and that after a 1.7 percent spurt last time. Purchases of food, drink and tobacco rose 1.4 percent, more than reversing March's 0.5 percent decline.

April's remarkable recovery in household demand means that sales volumes in April were some 2.4 percent above their first quarter average and at their strongest level so far in 2015. Purchases were still 0.8 percent below their mark at the end of 2014 but the risks of the Swiss economy falling back into recession this quarter have diminished greatly. The SNB's Monetary Policy Assessment on Thursday will retain a very cautious bias but hopes that economic activity is starting to stabilise have been given a more than useful lift.

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.