CH: Adjusted real retail sales

Tue Dec 01 02:15:00 CST 2015

Consensus Actual Previous Revised
Y/Y % change 0.2% -0.8% 0.2% -0.2%

Retail sales volumes rose 0.3 percent on the month in October, only just offsetting a weaker revised 0.2 percent decline in September. However, workday adjusted purchases were still 0.8 percent below their level a year ago and nominal sales were down fully 2.5 percent.

That said, October's overall monthly gain was partially checked by a 0.2 percent drop in sales of food, drink and tobacco. Excluding auto fuel, non-food volumes were up a respectable 0.7 percent although even this only dented the cumulative 2.1 percent slump seen over July-September.

With the latest SECO survey showing a marked decline in buying intentions in October, household consumption will probably struggle to achieve any real growth through year-end. If so, and with the exchange rate still uncomfortably firm, fourth quarter real GDP may not do much better than just match the third quarter's stagnation.

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.