|Month over Month||0.1%||1.4%||-0.5%|
|Year over Year||-0.1%||-0.2%|
Retail sales made an excellent start to the year. Excluding autos, nominal purchases were up fully 1.4 percent on the month, their best performance in five years (but only their second increase since June 2016). December's drop was unrevised at 0.5 percent. Unadjusted annual growth only improved marginally from minus 0.2 percent to minus 0.1 percent but this was biased down by calendar effects.
Importantly, the surge in cash sales was almost matched by volumes which recorded a solid 1.1 percent gain versus December. Within this, food was up a sizeable 1.9 percent, almost offsetting a cumulative 2 percent fall in November/December, while non-food advanced 0.8 percent after an equivalent decline last time.
As a result, overall volumes in January were 0.3 percent above their fourth quarter average. However, whether this surprising buoyancy can be sustained remains to be seen. Consumer confidence declined to a 5-month low in February and, at 11.9 percent, unemployment is both ominously high and, if anything, still trending up.
Note that as of this release, the retail sales report will be issued significantly earlier to reduce the lag between publication and the reference period to around forty days from currently about fifty-five days.
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.