CA: Retail Sales

Thu Jan 25 07:30:00 CST 2018

Consensus Actual Previous
Month over Month 0.8% 0.2% 1.5%
Year over Year 6.5% 6.7%

Retail sales increased for the third consecutive month in November, rising 0.2 percent after a revised October gain of 1.6 percent. This was lower than the expected 0.8 percent monthly increase. Sales were up in 6 of 11 subsectors, representing 37 percent of total retail trade. On the year, sales were up 6.5 percent. After removing the effects of price changes, retail sales in volume terms increased 0.3 percent on the month after rising 1.5 percent the month before.

Higher sales at gasoline stations, electronics and appliance stores and general merchandise stores offset lower receipts at new car dealers. Excluding motor vehicle and parts dealers, retail sales rose 1.6 percent. Receipts at gasoline stations (5.9 percent) were up for the third time in four months, largely reflecting higher prices at the pump. Electronics and appliance stores posted a 12.9 percent sales gain, on the strength of promotional events such as Black Friday coinciding with the timing of new product releases in November. General merchandise stores (1.8 percent) increased for the third consecutive month. Sales at clothing and clothing accessories stores advanced.

Following a 3.6 percent gain in October, sales fell at motor vehicle and parts dealers (down 3.6 percent) in November. Lower sales at new car dealers (down 5.3 percent) accounted for the decline at the subsector level, more than offsetting gains at other motor vehicle (8.8 percent) and used car (3.7 percent) dealers.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are reported in cash terms and disaggregated into eleven main subsectors. Aggregate volume figures are also provided.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.

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 apparel sales are showing exceptional weakness but electronics sales are soaring. 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.