DE: Retail Sales

Thu Mar 31 01:00:00 CDT 2016

Consensus Actual Previous Revised
Month over Month 0.4% -0.4% 0.7% -0.1%
Year over Year 5.4% -0.8% -1.2%

Retail sales undershot expectations in February with a monthly fall of 0.4 percent and that after January's tidy 0.7 percent increase had been revised to a 0.1 percent drop. Unadjusted annual growth jumped from minus 1.2 percent to a superficially very respectable 5.4 percent but this was wholly due to calendar distortions (last February had one fewer shopping day).

Despite the consecutive declines, the latest figures put average purchases in the first two months of the quarter 0.6 percent above their mean level in the fourth quarter. However, this just reflects the carryover from a cumulative 1.5 percent bounce in November/December.

According to the new GfK survey, consumer buying intentions slipped in March but remained high enough to suggest a decent month for the retail community. However, the same survey also signalled a good start to the year for the sector and that has now been revised away in the actual data. This may just be due to diverging trends in retail sales and spending on services but its leaves an uncertain outlook for overall household consumption.

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.