|Month over Month||0.3%||0.2%||-1.2%|
|Year over Year||1.0%||0.6%||0.8%|
July consumer spending on manufactured goods rose 0.2 percent on the month following an unrevised 1.2 percent drop in June. The modest advance raised annual growth from 0.8 percent to 1.0 percent but this was still its second weakest print so far this year.
The main area of weakness was household goods which saw a 3.1 percent monthly slump although this did come after a hefty 3.6 percent bounce in June. However, falls were quite broad-based and autos (minus 1.9 percent) were down for a fourth consecutive month and textiles (minus 1.2 percent) comfortably more than reversed the previous period's 0.8 percent gain. It was left to the other manufactured products category (0.5 percent) to post the only monthly increase.
Meantime, total goods spending continued to decline. July's 0.2 percent dip was the fourth decrease in a row and left the level of consumption an ominously large 1.0 percent below its second quarter mean. Although consumption of services probably held up rather better, this does not bode well for real GDP growth at the start of the current quarter. Indeed, with consumer confidence in August remaining historically soft possibly undermined by the recent terrorist attacks - third quarter household spending looks set to disappoint.
Consumption of manufactured goods by consumers is an indicator of consumer spending for household durable goods such as autos and furniture. The data are released separately as part of the report on total goods spending.
This indicator is a measure of retail sales and is unique to France. It measures consumer spending for household durable goods such as autos and furniture. The data are seasonally and workday adjusted. These adjustments eliminate the fluctuations that are solely due to changes in the number of working days. The data appear to be particularly sensitive to the number of worked Saturdays. With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being.
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.
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