CH: Adjusted real retail sales

February 2, 2017 02:15 CST

Consensus Actual Previous Revised
Y/Y % change 0.5% -3.5% 0.9% 0.8%

Swiss retailers had a poor end to 2016. Following three straight gains, sales slumped fully 2.4 percent on the month in December, their steepest decline since August 2011. As a result, annual workday adjusted growth dropped from 0.8 percent to minus 3.5 percent, one of the poorest performances on record.

In fact, the underlying developments were even worse. A 3.4 percent slide in purchases of food, drink and tobacco hit the headline hard but, excluding auto fuel, even non-food food volumes were down some 3.0 percent. Courtesy of earlier gains, overall fourth quarter sales growth was still a respectable 0.9 percent but the soft handover will put downside pressure on the first quarter of 2017.

The acute weakness of December looks rather odd in the wake of an apparent pick-up in economic growth and some signs of improving consumer sentiment. Chances are that January sales will see a decent rebound but if not, gradually fading deflationary risks will become much more of an issue once more.

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.