CH: Adjusted real retail sales

Thu Oct 01 02:15:00 CDT 2015

Actual Previous Revised
Y/Y % change -0.3% -0.1% 0.1%

Retail sales recovered some lost ground with a 0.5 percent monthly rise in August. Following an unrevised 0.6 percent drop in July this left workday adjusted purchases 0.3 percent below their level a year ago.

In fact underlying demand was rather more robust than the headline indicates as food sales were down 0.3 percent versus July, their first decline since May. Excluding auto fuel, non-food purchases were up a solid 1.3 percent, more than reversing their 1.0 percent slump at the start of the quarter and compounding a 2.2 percent surge in June.

As a result, average overall volumes in July/August were 0.3 percent above their mean level in the second quarter when they advanced 1.0 percent versus the first quarter. Consumer confidence is still soft and the monthly sales data are very erratic but today's report bodes well for a modest positive contribution from household spending to real GDP growth last quarter. The SNB should not be displeased.

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.