IT: Retail Sales

Wed Mar 14 04:00:00 CDT 2018

Consensus Actual Previous Revised
Month over Month -0.1% -0.5% -0.3% -0.9%
Year over Year -0.8% -0.1% -0.2%

Retailers endured a poor start to 2018. Sales (ex-autos) declined a further 0.5 percent on the month, compounding a steeper revised 0.9 percent drop in December and reducing unadjusted annual growth from minus 0.2 percent to minus 0.8 percent, a 3-month low.

Volume purchases were even weaker, posting a 0.7 percent decrease versus year-end. Both cash and real sales have now fallen in three of the last four months. Within the latter, food held up relatively well and was unchanged from its level in December. However, this left non-food demand, which slumped a full 1 percent, wholly accountable for the monthly headline decline.

January's poor results leave total volume sales 1.0 percent below their average level in the fourth quarter. Even should February fully reverse January's fall, this means that purchases will need to expand an improbably sharp monthly 1.6 percent in March just to ensure a flat quarterly performance.

Political uncertainty ahead of this month's general election may have played a part in January's disappointing outturn but the underlying trend is clearly soft. The sector looks likely to extend its run of negative contributions to real GDP growth this quarter.

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.