DE: Retail Sales

Tue Jun 30 01:00:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.0% 0.5% 1.7% 1.3%
Year over Year 2.8% -0.4% 1.0% 1.1%

Retail sales were stronger than expected in May, rising 0.5 percent on the month albeit only after a smaller revised 1.3 percent gain in April. However, base effects saw unadjusted annual growth decline from 1.1 percent to minus 0.4 percent, its first negative print since November 2014.

May's advance, which saw sales hit a new high, means that average volumes in the first two months of the second quarter were up 0.8 percent versus their first quarter mean and so bodes well for another sizeable contribution from household spending to real GDP growth.

According to the latest GfK survey consumers' willingness to buy declined in June but remained high enough to suggest that consumption ended the quarter on a relatively upbeat note. This will be important for a sustained economic recovery having seen net exports subtract 0.2 percentage points from quarterly growth in January-March. Even so, as yesterday's provisional June CPI data made plain, even a relatively buoyant household sector is accommodating only a gradual pick-up in inflation.

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.