FR: Consumer Mfgd Goods Consumption

Wed Feb 28 01:45:00 CST 2018

Consensus Actual Previous Revised
Month over Month 0.5% -0.9% -1.0% -1.1%
Year over Year 0.1% 1.3% 1.2%

Household spending on manufactured goods failed to rebound as expected in January. A 0.9 percent monthly fall compounded a marginally sharper revised 1.2 percent drop in December and left purchases just 0.1 percent above their level a year ago.

January's weakness was concentrated in autos, which slumped a monthly 3.0 percent, and textiles, which were down 1.3 percent. Household goods actually rose 1.7 percent and the other products category also eked out a meagre 0.1 percent advance.

Meanwhile, total goods buying fell a hefty 1.9 percent versus January when it decreased an already sizeable 1.2 percent. Energy (minus 7.6 percent) and food (minus 0.6 percent) both weighed. This puts January spending fully 1.7 percent below its average level in the fourth quarter and means that February/March will have to see a significant pick up if the sector is to provide any boost the first quarter real GDP growth. To this end, consumer confidence declined sharply in February, returning to its long-run average for the first time since April last year. Purchasing plans were little changed but the risk is that spending tails off over the latter half of the quarter.

What looked set to be a very robust first quarter for the French economy is now that much less certain.

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.