DE: Retail Sales

Mon Aug 31 01:00:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 1.1% 1.4% -2.3% -1.0%
Year over Year 1.7% 3.3% 5.1% 5.2%

Retail sales rebounded rather more strongly than expected in July and that following a significantly smaller revised drop in June. Hence, having seen the end of quarter monthly decrease more than halved to 1.0 percent, volumes jumped fully 1.4 percent at the start of the new period. Unadjusted annual growth fell from 5.2 percent to 3.3 percent but this was biased down by working day distortions.

August's bounce put sales volumes at a new record high and meant that purchases were 0.8 percent above their average in the second quarter when they shrank 0.4 percent versus January-March and helped to reduce overall household spending growth to just 0.2 percent.

Accordingly, the signs are that the third quarter has begun well. However, the latest GfK survey found consumers' willingness to buy falling for a third consecutive month in August so prospects for the rest of the quarter are somewhat clouded. That said, the survey also indicated that buying intentions remained historically high so some positive contribution from the retail sector to GDP growth still looks very likely.

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.