CA: Retail Sales

October 21, 2016 07:30 CDT

Consensus Actual Previous
Month over Month 0.2% -0.1% -0.1%
Year over Year 1.6% 2.3%

August retail sales disappointed and edged 0.1 percent lower on the month. Lower sales at motor vehicle & parts dealers, and general merchandise stores were the main contributors to the decline. Excluding these two subsectors, retail sales were up 0.2 percent. On the year, retail sales were up 1.6 percent after increasing 2.1 percent last time. Sales were down in 7 of 11 subsectors, representing 57 percent of retail trade. In volume terms, sales were down 0.3 percent on the month.

Sales at motor vehicle & parts dealers were down 0.5 percent in August, in large part because of weaker sales at new car dealers and, to a much lesser extent, used car dealers. Following declines in July, sales rose at other motor vehicle dealers and automotive parts, accessories and tire stores. General merchandise stores (down 0.9 percent) recorded their third decline in four months. After increasing 1.5 percent in July, sales at building material & garden equipment & supplies dealers were down 0.5 percent in August.

Clothing & clothing accessories stores posted a 0.5 percent sales decline. Sales at furniture & home furnishings stores increased 1.7 percent. Gains were also recorded at health and personal care stores and gasoline stations, where sales increased for the fourth time in five months. Following relatively flat sales in July, sales at food and beverage stores edged up 0.2 percent in August.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are reported in cash terms and disaggregated into eleven main subsectors. Aggregate volume figures are also provided.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.

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 apparel sales are showing exceptional weakness but electronics sales are soaring. 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.