IT: Retail Sales

Mon Dec 11 03:00:00 CST 2017

Actual Previous Revised
Month over Month -1.0% 0.9% 0.8%
Year over Year -2.1% 3.4% 3.1%

Retail sales were very weak in October. Following a slightly smaller revised 0.8 percent monthly increase in September, purchases (ex-autos) fell fully 2.1 percent, their worst performance since November 2016. Unadjusted annual growth dropped from 3.1 percent to minus 2.1 percent.

Volumes were even softer, declining 1.1 percent versus September to stand 2.9 percent below their level a year ago. Food was down 1.1 percent on the month but non-food also decreased a sizeable 0.8 percent, fully reversing September's gain and the third fall in the last three months.

The October data put overall sales in October 0.7 percent below their average level in the third quarter when they edged up 0.1 percent versus April-June. With consumer confidence declining in November according to Istat's latest survey, retailers must be worried about how the key Xmas shopping period will pan out.

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.