CH: Adjusted real retail sales

Wed Aug 02 02:15:00 CDT 2017

Actual Previous Revised
Y/Y % change 1.5% -0.3% -0.8%

Retail sales advanced for a second month in a row in June. A 0.8 percent monthly increase followed a stronger revised 0.5 percent gain in mid-quarter and constituted the best performance since March. Annual workday adjusted growth was 1.5 percent, up from minus 0.8 percent last time and the first positive reading in three months.

However, much of monthly improvement was attributable to food, drink and tobacco which saw a 0.6 percent gain. Excluding auto fuel, non-food purchases only edged 0.1 percent firmer following a 0.6 percent increase in May.

In fact, courtesy of a hefty 2.9 percent slump in April, even overall sales were down 1.2 percent on the quarter so the sector will have offered no support for second quarter real GDP growth. The new SECO consumer confidence survey (see today's calendar entry) offers some hope for a better third quarter but there is little reason at this stage for supposing that household spending is about to bounce back sharply.

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.