IT: Retail Sales

June 7, 2017 03:00 CDT

Consensus Actual Previous Revised
Month over Month 0.2% -0.1% 0.0%
Year over Year 1.2% -0.4% -0.5%

Retail sales (excluding autos) were again soft in April. A 0.1 percent monthly fall followed an unrevised unchanged level in March and only boosted unadjusted annual growth to 1.2 percent due to favourable base effects.

Volumes were only marginally stronger, posting no change versus the end of the quarter. Yearly growth was just 0.3 percent.

To make matters worse, volume purchases only kept their head above water courtesy of a 0.6 percent monthly rise in sales of food. The non-food sector saw a 0.4 percent decline that more than erased modest increases in February and March.

The ongoing sluggishness of retail demand remains a major problem for the Italian economic recovery. Total volume sales rose just a quarterly 0.2 percent in January-March and April's level was 0.1 percent short of that period's average. Moreover, consumer confidence in May recorded its weakest reading since January 2015. Real GDP growth climbed to a 0.4 percent quarterly rate at the start of the year but looks likely to struggle to match that pace this quarter.

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.