EMU: Retail Sales

Fri Jul 03 04:00:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.1% 0.2% 0.7%
Year over Year 2.3% 2.4% 2.2% 2.7%

Retail sales were much as expected in May. Following an unrevised 0.7 percent monthly increase in April volumes rose a further 0.2 percent to stand 2.4 percent higher than a year ago, down from a 2.7 percent annual rate last time. Purchases have now registered gains in six of the last eight months and only fallen once.

In fact underlying developments were rather more positive as sales of auto fuel declined 0.7 percent versus April. Food, drink and tobacco as well as non-food (ex-auto fuel) purchases were up 0.4 percent, the latter equalling their second strongest rate so far in 2015.

Regionally the monthly headline advance was boosted by the core countries with France up 0.6 percent and Germany 0.5 percent. Spain saw a 0.3 percent increase, its third rise in as many months, while elsewhere there were respectable performances by Estonia (1.4 percent), Malta (1.1 percent), and Slovenia (0.8 percent).

May's data put average Eurozone sales in April/May 0.6 percent above their mean in the first quarter when they rose 0.7 percent. This suggests that household consumption was again a key source of growth but also warns that real GDP is unlikely to have picked up any real momentum. The economic recovery is ongoing but remains quite sluggish.

Retail sales measure the total receipts at stores that sell durable and nondurable goods.

Retail sales are important indicators of domestic consumer demand and are monitored closely by analysts as an important input to GDP. 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's a big advantage for investors. The data are available in both value and volume measures although the press release deals only with volume. In addition to the total, the initial report provides a limited breakdown that separately identifies food, drink and tobacco, and (excluding automotive fuel) non-food products. A more comprehensive dataset is only available with the following month’s release. Unlike the U.S. and Canada, auto sales are not included in the retail sales data.

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.