IT: Retail Sales

Wed Apr 11 03:00:00 CDT 2018

Consensus Actual Previous Revised
Month over Month 0.3% 0.4% -0.5%
Year over Year -0.6% -0.8% -0.7%

Retail sales (ex-autos) had a moderately good February. A 0.4 percent monthly rise was the first increase since last November and only the second since September. Unadjusted annual growth edged just a tick higher to minus 0.6 percent.

February's rebound in nominal purchases was more than matched by volumes which were up 0.9 percent versus the start of the year. This was enough to lift yearly growth from minus 1.8 percent to 0.0 percent, a 3-month high. The monthly gain here was led by food, which posted a 1.2 percent advance, but non-food also saw a respectable 0.7 percent gain.

Nonetheless, the underlying trend remains soft and average overall volume sales in January/February were 0.6 percent below their fourth quarter mean. Political uncertainty ahead of March's (inconclusive) general election may have been a factor but sales have been struggling to keep their head above water since the middle of last year. As things currently stand, March purchases will need to rise fully 1.3 percent to prevent the sector from subtracting from first quarter real GDP growth.

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.