DE: Retail Sales

Mon Oct 30 02:00:00 CDT 2017

Consensus Actual Previous Revised
Month over Month 0.6% 0.5% -0.4% -0.2%
Year over Year 4.1% 2.8% 3.0%

Retailers had a much better period in September. Following smaller revised falls in both July (0.5 percent) and August (0.2 percent), non-auto volume sales rebounded 0.5 percent on the month, their second largest increase since March. Unadjusted annual growth jumped 1.1 percentage points to 4.1 percent, its best outturn since May. The results were broadly in line with market expectations.

The level of sales in September was still short of the record high seen in June but enough to lift quarterly growth to 0.2 percent. However, that was well down on the 1.4 percent rate recorded in the second quarter.

According to business and consumer surveys, October was another good month for household spending and the retail sector. Certainly, consumer fundamentals remain very positive with confidence around historical highs and joblessness at a post-Reunification low. Nonetheless, the likelihood is that overall consumer spending provided less of a boost to real GDP growth last quarter than the 0.4 percentage points it supplied in the previous period.

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. Autos are excluded. A very limited breakdown of subsector performance is available in the initial report which is itself subject to sometimes sizeable revision but much greater detail is provided in the following month's release.

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.