CA: Retail Sales

December 22, 2016 07:30 CST

Consensus Actual Previous
Month over Month 0.2% 1.1% 0.6%
Year over Year 3.8% 2.5%

Retail sales were up for a third consecutive month in October. Sales were up a much greater than anticipated 1.1 percent on the month and up 3.8 percent from the same month a year ago. Expectations were for a monthly increase of 0.2 percent. Sales were up in 9 of 11 subsectors representing 90 percent of total retail trade. Higher sales at gasoline stations and general merchandise stores were the main contributors to the gain. Excluding sales at motor vehicle and parts dealers, retail sales were up 1.4 percent in October. After removing the effects of price changes, retail sales in volume terms increased 0.6 percent following a 0.7 percent increase in September.

Gasoline station sales rose 3.8 percent, the largest percentage increase since April 2016 thanks to higher pump prices. General merchandise stores were up 1.9 percent for their third increase in four months. Food and beverage stores rebounded 1.1 percent and more than offsetting a September decline. Clothing and clothing accessories store sales were up 1.4 percent across all store types.

Motor vehicles and parts dealers' sales were essentially unchanged following a 2.6 percent increase in September. Sales at electronics and appliances stores declined 1.1 percent offsetting the gain 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.