IT: Retail Sales

January 26, 2017 03:00 CST

Consensus Actual Previous Revised
Month over Month 0.1% -0.7% 1.2%
Year over Year 0.8% -0.2% -0.1%

Following their surprising strength in October, retail sales (ex-autos) suffered a sizeable reversal in November. Nominal sales fell fully 0.7 percent on the month, although calendar distortions saw annual growth misleadingly climb from minus 0.1 percent to 0.8 percent.

The volumes picture was no better with purchases down a slightly sharper 0.8 percent from the start of the quarter for a yearly rise of 0.7 percent. This was the fourth decline in the last five months and also the steepest over the period.

However, the weakness of the headline data was slightly skewed inasmuch as it was dominated by food which saw a 1.2 percent monthly contraction. Non-food was off a much smaller 0.5 percent (volumes down 0.4 percent).

The latest figures put average volume sales in October/November 0.5 percent above their third quarter mean and, in the absence of a hefty fall in December, sales will at least add to fourth quarter real GDP growth.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are expressed in nominal terms but volume statistics are also available. Autos are excluded. Only a very limited breakdown of subsector performance is available in the first report 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. 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.