FR: Consumer Mfgd Goods Consumption

Wed Nov 29 01:45:00 CST 2017

Consensus Actual Previous Revised
Month over Month -0.1% -1.6% 0.8% 0.9%
Year over Year 0.2% 2.9%

Household spending on manufactured goods was very weak in October. Following a marginally stronger revised 0.9 percent monthly rise in September, purchases fell a hefty and much sharper than expected 1.6 percent, their worst performance since April 2012. Annual growth dropped from 2.9 percent to just 0.2 percent.

Amongst the major categories, monthly declines were broad-based. Textiles (5.2 percent) were especially soft and household goods (3.0 percent) not much better. With autos off 0.3 percent and the other products group down 0.1 percent, spending dropped to its lowest level since January.

In fact, total goods consumption was even weaker, slumping fully 1.9 percent versus September under the additional weight of a 6.1 percent nosedive in energy and 0.3 percent fall in food. As a result, overall goods spending in the latest three months was only flat versus May-July (manufactured goods also 0.0 percent).

Although consumer confidence has recently been in decline, the October data are surprisingly poor. This may simply prove to be monthly volatility and certainly a rebound in confidence bodes well for November. Still, it makes for a notably poor start to the fourth quarter and without a sizeable rebound in November/December, will dampen fourth quarter GDP growth.

Consumption of manufactured goods by consumers is an indicator of consumer spending for household durable goods such as autos and furniture. The data are released separately as part of the report on total goods spending.

This indicator is a measure of retail sales and is unique to France. It measures consumer spending for household durable goods such as autos and furniture. The data are seasonally and workday adjusted. These adjustments eliminate the fluctuations that are solely due to changes in the number of working days. The data appear to be particularly sensitive to the number of worked Saturdays. 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.

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.