DE: Retail Sales

Fri Sep 29 01:00:00 CDT 2017

Consensus Actual Previous Revised
Month over Month 0.5% -0.4% -1.2%
Year over Year 2.8% 2.7% 2.8%

Retail sales failed to rebound as expected in August. Following an unrevised 1.2 percent monthly drop in July, purchases (ex-autos) declined a further 0.4 percent for their first back-to-back contraction since February/March 2016. Unadjusted annual growth was 2.8 percent, unchanged from a marginally firmer revised print last time.

In line with July, August's surprising setback flies in the face of recent consumer confidence surveys that have pointed to a very buoyant household sector. It may be that the sales data will be revised stronger in due course or that spending on services, not included in this report, has accelerated. Or it may be that for some reason the surveys have become, at least temporarily, detached from actual consumer behaviour.

At any rate, as they stand the latest figures put average volumes in July/August 0.5 percent below their second quarter mean. In the absence of revisions, purchases will need to expand a monthly 1.8 percent in September just to hold the current quarter flat.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data are compiled from about 27,000 retail businesses and are reported in both nominal and volume terms. Autos are excluded. A very limited breakdown of subsector performance is available in the initial report which is itself subject to sometimes sizeable revision 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. Both the Federal Statistical Office and the Bundesbank publish retail trade data. Until recently, there were vast differences between them, primarily because they each used a different seasonal adjustment program. This difference ended when the Statistical Office began using the U.S. Census Arima X12 methodology as well as their Berlin method. Another difference is that the Federal Statistical Office data are generally for total retail sales while the Bundesbank data features sales excluding autos and petrol stations or excluding only autos. The data here are for total retail sales.

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.