CH: Adjusted real retail sales

January 9, 2017 02:15 CST

Consensus Actual Previous Revised
Y/Y % change 0.4% 0.9% -0.5% -0.7%

Retail sales expanded for a third consecutive month in November. A 0.7 percent monthly increase followed a marginally smaller revised 1.1 percent advance in October and lifted annual workday adjusted growth from minus 0.7 percent to 0.9 percent, the first positive reading since July 2015.

In fact, the underlying picture was rather stronger as sales of food, drink and tobacco were up just 0.2 percent versus October. Excluding auto fuel, purchases of non-food items climbed an impressive 1.9 percent, and that after a 2.2 percent spurt last time.

The November data put average total retail sales in October/November 1.6 percent above their third quarter mean. Without a sizeable setback in December, this suggests that the retail sector will make a tidy contribution to fourth quarter real GDP growth.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The survey comprises around 4,000 companies with the small-sized firms asked to provide monthly turnover data on a quarterly basis. Statistics are provided in both nominal and volume measures; the latter is the more important for financial markets. The headline figure is the annual growth in sales volumes adjusted for differences in trading days. Seasonally adjusted monthly changes are also provided. Details are limited in the first estimate but a more complete picture is provided with the following month's release.

Consumer spending accounts for a large portion of the economy, so if you know what consumers are up to, you will have a pretty good idea on where the economy is headed. Needless to say, that is a big advantage for investors. 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.