CA: Retail Sales

November 22, 2016 07:30 CST

Consensus Actual Previous
Month over Month 0.7% 0.6% -0.1%
Year over Year 2.5% 1.6%

Following four months of little change, September retail sales rose 0.6 percent thanks mainly to the strength of motor vehicle and parts dealers. On the year, sales were up 2.5 percent. Sales were up in 7 of 11 subsectors, representing 65 percent of retail trade.

However, core sales weakened over the month. Excluding the increase autos and parts, sales were flat in September after edging up 0.2 percent in August. And excluding autos and parts as well as gasoline stations, sales contracted 0.2 percent on the month and erasing August's 0.2 percent gain.

Motor vehicle & parts dealers were up 2.4 percent for the first gain in three months. Sales at gasoline stations rose 0.9 percent, marking the fifth gain in six months. The gain in September reflected higher prices at the pump. Following a 0.4 percent decline in August, sales at general merchandise stores (up 0.4 percent) bounced back in September. Also recording gains were building material & garden equipment & supplies dealers (up 0.7 percent) and sporting goods, hobby, book & music stores (up 0.2 percent) more than offset the declines in August.

Clothing & clothing accessories stores advanced (up 0.2 percent) but did not offset the decline in August. Electronics & appliance stores (up 0.3 percent) increased for the fifth consecutive month, marking the first time since mid-2008 that sales in this subsector have posted five consecutive gains.

However, food & beverage stores were down 0.8 percent in September. Sales at health & personal care stores (down 0.6 percent) and miscellaneous store retailers (down 0.3 percent) were also down in September.

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.