The retail sales number is a crucial data point in the United States and its release is one of the most market-moving events of the month.
The data hits the newswires at 8:30 Eastern Time on or around the 13th of every month.
The Retail Sales Report is a good reflection of the current state of the U.S. economy and is also considered to be a reliable barometer for inflationary pressures. While the data does not carry the same amount of importance as the monthly Non-Farm Payroll Report, it is still one of the Fed’s most scrutinized data points as they consider U.S. monetary policy.
The Retail Sales Report data reflects sales from 13 major types of retailers, from food and beverage stores to gas stations.
This is the breakdown of different types of retailers in the report:
It is important to know which components are most volatile. For example, autos, gas and food prices are heavily impacted by seasonality and by underlying changes in the price of raw goods.
Other factors to consider include political instability, high oil prices and even bad weather, which can dent consumer confidence and translate into lower spending.
The Retail Sales Report is complex, so most traders look for two or three key pieces of information. The primary focus upon release is the headline figure, “Advanced Retail Sales,” along with any revisions of previous reports. One point of note is that analyst expectations tend to incorporate more uncertainty during holiday periods, when there is typically a surge in consumer spending. Data releases over such periods can often be subject to large revisions.
Traders also focus on what is known as the control group. The control group is all sales, excluding receipts from auto dealers, building-materials retailers, gas stations, office supply stores, mobile homes and tobacco stores. This filtered number is a more precise method of gauging consumer spending, and consumer spending is a large component of U.S. GDP.
Finally, other data points, such as ex-auto and gas, remove some of the most volatile retailers from retail sales numbers. These can be used as alternatives to the control group numbers.
As you can see, there are several factors to take into consideration when trading the U.S. Retail Sales Report. But with a little preparation, this release is an event that offers numerous insights into the economy and many opportunities for traders.