CH: Adjusted real retail sales

Thu Nov 02 03:15:00 CDT 2017

Actual Previous Revised
Y/Y % change -0.4% -0.2% -1.0%

Retail sales strengthened in September. However, while volume purchases rose 0.5 percent on the month, this only followed a sharper revised 0.7 percent drop in August. Annual workday adjusted growth was minus 0.4 percent, up from minus 1.0 percent last time.

September's rebound constituted the first positive monthly growth since June. However, the increase was driven by sales of food, alcohol and tobacco which climbed 1.2 percent. By contrast, excluding auto fuel, non-food demand was down 0.2 percent, compounding its 1.0 percent decline in August.

The latest data put third quarter retail sales 0.5 percent below their level in the second quarter when they dropped a sizeable 1.2 percent versus January-March. This warns of no significant pick-up in total consumer spending last quarter and, in turn, reduced scope for a meaningful acceleration in real GDP growth.

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.