DE: Retail Sales

Fri Jan 05 01:00:00 CST 2018

Consensus Actual Previous Revised
Month over Month 1.1% 2.3% -1.2% -1.0%
Year over Year 4.4% -1.4% -0.9%

Following a surprisingly weak (albeit stronger revised) October, retail sales rebounded sharply in November. In fact, a 2.3 percent monthly spurt was double the expected rise and the strongest performance since October 2016. Unadjusted annual volumes growth climbed from minus 0.9 percent to 4.4 percent, equalling its best mark since May.

Against a backdrop of near-record readings on consumer confidence and a very buoyant labour market, sales had been strangely soft since June. However, November's bounce puts demand back on track with average purchases in October/November up 0.6 percent from their mean level in the third quarter when they rose 0.2 percent versus April-June.

As a result, even if December was only flat, fourth quarter retail sales will have achieved a 1 percent quarterly growth rate. This would be consistent with other indicators pointing to a very robust end to 2017 by the German economy as a whole.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data are compiled from about 27,000 retail businesses and are reported in both nominal and volume terms. Autos are excluded. A very limited breakdown of subsector performance is available in the initial report which is itself subject to sometimes sizeable revision 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. Both the Federal Statistical Office and the Bundesbank publish retail trade data. Until recently, there were vast differences between them, primarily because they each used a different seasonal adjustment program. This difference ended when the Statistical Office began using the U.S. Census Arima X12 methodology as well as their Berlin method. Another difference is that the Federal Statistical Office data are generally for total retail sales while the Bundesbank data features sales excluding autos and petrol stations or excluding only autos. The data here are for total retail sales.

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.