CH: Adjusted real retail sales

Mon Jul 03 02:15:00 CDT 2017

Actual Previous Revised
Y/Y % change -0.3% -1.2% -0.9%

Following a steeper revised 2.7 percent monthly slump in April, retail sales volumes rose just 0.3 percent in May to lift annual workday adjusted growth from minus 1.9 percent to minus 0.3 percent.

Moreover, May's monthly advance was concentrated in the food, drink and tobacco category which saw a 0.6 percent advance after a 0.9 percent contraction last time. More significantly, excluding auto fuel, non-food purchases were only flat and so made no impression on April's 3.3 percent nosedive.

Average overall volumes in April/May were some 1.4 percent below their mean level in the first quarter and will need a highly improbable surge of more than 4 percent in June if they are not to subtract from second 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.