CA: Retail Sales

Fri Nov 20 07:30:00 CST 2015

Consensus Actual Previous
Month over Month 0.3% -0.5% 0.5%
Year over Year 1.2% 2.8%

Following four months of gains, September retail sales retreated 0.5 percent. On the year sales were up 1.2 percent. However, after removing the effects of price changes, particularly lower gasoline prices, retail sales in volume terms edged up 0.1 percent. Sales at gasoline stations declined 3.7 percent in September to their lowest level since January 2015, reflecting lower prices at the pump. According to the CPI, unadjusted gasoline prices declined 7.9 percent in September compared with August.

Following seven consecutive monthly advances, sales at motor vehicle & parts dealers were down 0.5 percent, partly offsetting August's gains. The overall subsector decline was due in large part to weaker sales at new car dealers (down 0.6 percent) and, to a much lesser extent, automotive parts, accessories & tire stores (down 1.4 percent). Higher sales were reported at other motor vehicle dealers (up 2.0 percent).

Sales were down at sporting goods, hobby, book & music stores (down 3.3 percent) from weaker sales at sporting goods stores. Sales at clothing & clothing accessories stores were down for a second month, this time 1.2 percent. Jewelry, luggage & leather goods stores also reported lower sales in September. Receipts at furniture & home furnishings stores decreased for the second time in three months. General merchandise stores sales were up for the fourth time in five months while sales at building material & garden equipment and supplies dealers advanced, though the level of sales remained below the all-time high recorded in May. Food & beverage store receipts also edged up on the month.

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.