DE: Retail Sales

January 6, 2017 01:00 CST

Consensus Actual Previous Revised
Month over Month -0.9% -1.8% 2.4% 2.5%
Year over Year 3.2% -1.0% -0.8%

Retailers had a surprisingly poor November. Following a marginally firmer revised 2.5 percent monthly jump in October, sales (ex-autos) dropped a larger than expected 1.8 percent, their worst performance in 2016 so far. Unadjusted annual growth was 3.2 percent, up from minus 0.8 percent, but flattered by favourable calendar distortions.

The November decline means that average purchases in October/November were 0.6 percent above their mean level in the third quarter when they crept just 0.2 percent higher versus the April-June period. The trend in sales remains up, but perhaps not quite as steeply as seemed to be the case just a month ago.

According to the most recent GfK survey, consumers' propensity to spend dipped in December but was still easily high enough to suggest a buoyant level of activity to close out the year. Certainly, ongoing gains in employment, rising wages and still low inflation bode well. Total household consumption probably provided an important lift to fourth quarter GDP growth.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data are compiled from about 27,000 retail businesses and are reported in both nominal and volume terms. Autos are excluded. A very limited breakdown of subsector performance is available in the initial report which is itself subject to sometimes sizeable revision but much greater detail is provided in the following month's release.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. Both the Federal Statistical Office and the Bundesbank publish retail trade data. Until recently, there were vast differences between them, primarily because they each used a different seasonal adjustment program. This difference ended when the Statistical Office began using the U.S. Census Arima X12 methodology as well as their Berlin method. Another difference is that the Federal Statistical Office data are generally for total retail sales while the Bundesbank data features sales excluding autos and petrol stations or excluding only autos. The data here are for total retail sales.

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.