CA: Retail Sales

Thu Oct 22 07:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.1% 0.5% 0.5% 0.6%
Year over Year 2.8% 1.8% 1.9%

Retail sales were relatively upbeat in August. A 0.5 percent monthly rise was on the strong side of the market consensus and followed a marginally firmer revised 0.6 percent increase in July. Sales have now risen for four months in a row and, compared with a year ago, mid-quarter purchases were up 2.8 percent after a 1.9 percent gain last time.

Volumes performed even better and increased 0.7 percent versus July when they advanced 0.3 percent.

However, within the monthly rise in total nominal sales only four subsectors saw positive growth. Motor vehicle and parts climbed 2.0 percent and excluding this category and gasoline (minus 0.6 percent), purchases were just 0.2 percent firmer. Elsewhere food and drink rose 0.5 percent, furniture and home furnishings increased 3.0 percent and clothing and footwear gained 0.3 percent but most other areas saw declines.

August's sales should have benefitted from newly delivered family tax breaks introduced by the outgoing Conservative government and to this end might prove misleadingly firm. Still, having seen inflation adjusted manufacturing shipments dip on the month and merchandise goods export volumes edge only slightly firmer, the solid rise in real retail sales should help to ensure that August was a reasonably respectable period GDP growth. As of yesterday's updated Monetary Policy Report the BoC expects third total output to have expanded 2.5 percent (saar) but sees a slowdown to a 1.5 percent rate in the current quarter. Today's data should have few immediate implications for financial markets.

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

With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.

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 apparel sales are showing exceptional weakness but electronics sales are soaring. 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.