CH: Adjusted real retail sales

August 2, 2016 02:15 CDT

Consensus Actual Previous
Y/Y % change -2.0% -3.9% -1.6%

Retail sales were soft in June. Volumes declined 0.5 percent on the month and now show an annual decline of some 3.9 percent.

The fall in the headline data reflected broad-based weakness. Hence, excluding auto fuel, total purchases were also 0.5 percent lower on the month while sales of food, drink and tobacco dropped 0.7 percent and non-food 0.6 percent.

The recent weakness of retail sales has reflected low levels of consumer confidence. To this end SECO will be updating their consumer climate indicator for July on Thursday. This will provide an early guide to probable spending patterns this quarter.

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.