CA: Retail Sales

Fri Sep 22 07:30:00 CDT 2017

Consensus Actual Previous
Month over Month 0.1% 0.4% 0.1%
Year over Year 7.8% 7.3%

July retail sales were up a greater than anticipated 0.4 percent and were 7.8 percent higher than the same month a year ago. Expectations were for a muted monthly increase of 0.1 percent. Higher sales at motor vehicle & parts dealers and food & beverage stores were the main contributors to the gain. Sales were up in 6 of 11 subsectors, representing 75 percent of total retail trade. However, after removing the effects of price changes, retail sales in volume terms decreased 0.2 percent. Volumes were especially weak for gasoline stations and electronics & appliances.

Motor vehicle & parts dealers were up 0.8 percent with higher sales at new car dealers (+1.4 percent) accounting for the increase and more than offsetting declines at the other store types. Following gains in June, sales declined at used car dealers (down 2.4 percent), other motor vehicle dealers (down 2.7 percent) and automotive parts, accessories & tire stores (down 0.2 percent). Food & beverage stores were up 0.9 percent, rising for the fourth consecutive month. Health & personal care stores (+0.7 percent) reported higher sales for the sixth time in seven months.

Sales at miscellaneous store retailers advanced 0.9 percent, rising for the fourth consecutive month. Stores in this subsector include used merchandise stores, office supplies and stationery stores, and pet and pet supplies stores. Gasoline stations were down for the third consecutive month in July. Following a 1.9 percent gain in June, building material and garden equipment and supplies dealers posted their first decline in five months.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are reported in cash terms and disaggregated into eleven main subsectors. Aggregate volume figures are also provided.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.

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 apparel sales are showing exceptional weakness but electronics sales are soaring. 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.