IT: Retail Sales

Fri Oct 06 03:00:00 CDT 2017

Consensus Actual Previous Revised
Month over Month 0.2% -0.3% -0.2% -0.4%
Year over Year -0.5% 0.0% -0.4%

Retail sales fell again in August. Following a steeper revised 0.4 percent decline in July, ex-auto volumes dropped a further 0.3 percent on the month to shave unadjusted annual growth from minus 0.4 percent to minus 0.5 percent.

Ominously too, the decrease in nominal purchases was more than matched by volumes which were 0.4 percent lower versus July and 1.0 percent weaker on the year. Even worse, non-food sales were off a sharper 0.5 percent on the month and that after a 0.7 percent decline in the previous period.

As a result, average real retail sales in July/August were 0.2 percent short of their second quarter average when they fell a quarterly 0.3 percent and total household consumption expanded at a modest 0.3 percent rate. This hardly bodes well for any meaningful acceleration in spending last quarter. However, with consumer confidence in September climbing to its highest level since January 2016, it may just be that the quarter ended on a more promising note. Italian retailers will certainly hope so.

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.