IT: Retail Sales

Fri Aug 04 03:00:00 CDT 2017

Consensus Actual Previous Revised
Month over Month 0.2% 0.6% -0.1% 0.0%
Year over Year 1.5% 1.8%

The longstanding dismal picture of retail sales improved a little in June. A 0.6 percent monthly bounce in purchases (ex-autos) was the strongest performance since January although unadjusted annual growth still slowed from May's 1.8 percent to 1.5 percent due to unfavourable calendar effects.

Importantly, volumes did even better with a healthy, and much needed, 0.8 percent increase on the month that followed a flat reading last time. Within this, food dominated with a 1.3 percent spurt but non-food also gained a useful 0.6 percent, building on May's 0.5 percent rise.

Still, the June data were only enough to return both overall nominal and real sales back to their respective levels at the start of the year. Indeed, second quarter cash sales were 0.3 percent short of their first quarter mark while volumes were down 0.1 percent. With consumer confidence well off its recent highs, June's report does not alter significantly a soft underlying trend.

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.