DE: Retail Sales

Tue Apr 03 01:00:00 CDT 2018

Consensus Actual Previous Revised
Month over Month 0.7% -0.7% -0.7% -0.3%
Year over Year 2.4% 1.3% 2.3% 2.5%

Retail sales failed to post the expected rebound in February. Although January's monthly decline was more than halved to 0.3 percent, this was followed by a further, sizeable, 0.7 percent drop in mid-quarter. Bad weather may have had an impact. Unadjusted annual growth was 1.3 percent, down from 2.5 percent at the start of the year.

February's monthly decrease means that purchases have now fallen for three consecutive months, the first time that this has happened since the three months ending February 2009. In fact, sales have only risen twice since June last year and that despite the ongoing buoyancy of consumer confidence.

Average purchases in January/February were 0.6 percent below their mean level in the fourth quarter. In the absence of any revisions, this leaves March requiring a 2.3 percent monthly bounce just to keep the first quarter flat. Spending on services has helped to underpin overall household consumption for a while now but the risks are that real GDP growth last quarter was on the soft side of current expectations. Today's outturn also bodes poorly for the Eurozone retail sales report due Thursday.

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.