DE: Retail Sales

Fri Oct 30 02:00:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.4% 0.0% -0.4% -0.7%
Year over Year 4.2% 3.4% 2.5% 2.1%

Retailers had a disappointing September. Sales were only unchanged on the month and that after a steeper revised 0.7 percent drop in August. Annual unadjusted growth still rose from 2.1 percent to 3.4 percent but this simply reflected a particularly soft period for demand a year ago.

The latest decline means that volumes have only risen once in the last four months, although that was a hefty 1.8 percent spurt in July. Even so, the mid-quarter bounce was enough to ensure that spending in the third quarter as a whole still advanced a respectable 0.9 percent versus the second quarter when it fell 0.3 percent. This points to a useful contribution from total household consumption to real GDP growth.

That said, consumer confidence, while still historically firm, has shown signs of waning in recent months and the new GfK survey (see Wednesday's calendar entry) also found a weakening in buying intentions. Indeed, this measure has now declined for five straight months. As such, household activity looks set to cool somewhat entering the current quarter which, in turn, could pave the way for an unwanted slowdown in economic growth.

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.