DE: Retail Sales

January 31, 2017 01:00 CST

Consensus Actual Previous Revised
Month over Month 0.6% -0.9% -1.8% -1.7%
Year over Year -1.1% 3.2% 3.5%

Retailers endured a surprisingly poor December with volume sales (excluding autos) sliding a sizeable 0.9 percent on the month following a marginally smaller revised 1.7 percent slump in November. Unadjusted annual growth dropped from 3.5 percent to minus 1.1 percent.

The poor end to 2016 still made for a calendar year 1.6 percent gain versus 2015 (nominal 2.2 percent) but left fourth quarter sales just 0.3 percent above their level in the previous period. And that was only because of a 2.7 percent monthly spurt in October. Indeed, purchases have now fallen in three of the last four months.

The weakness is in sharp contrast to surveys of consumer sentiment which have typically pointed to quite or very high levels of consumer confidence and similarly elevated buying intentions. This may mean that December sales will be revised up and/or that January will see a sizeable rebound. However, as things currently stand, fourth German GDP is not looking quite as robust as it did before this report.

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.