CH: Adjusted real retail sales

Mon Sep 14 02:15:00 CDT 2015

Actual Previous Revised
Y/Y % change -0.1% -0.9% -1.2%

Retail sales were weak in July. Following a smaller revised 1.2 percent monthly gain in June, volume purchases dropped 0.6 percent in July, their second fall in the last three months. However, annual workday adjusted growth rose from minus 1.2 percent to minus 0.1 percent, its strongest reading since April.

Excluding fuel, non-food sales declined a monthly 0.9 percent although this only reversed half of June's impressive 1.8 percent bounce. Food, beverage and tobacco consumption was flat following a 0.5 percent increase last time.

The latest figures put overall volume sales just 0.1 percent below their average second quarter level when they jumped 1.1 percent. As such, and despite July's setback, there is reason for supposing that the household sector is starting to settle down after the shock change to SNB FX policy in January. That said, consumer sentiment remains very fragile and the SNB will certainly be taking nothing for granted with deflation pressures still as intense as ever.

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.