DE: Retail Sales

Wed May 30 01:00:00 CDT 2018

Consensus Actual Previous Revised
Month over Month 0.5% 2.3% -0.6% -0.4%
Year over Year 1.2% 1.3% 1.7%

April retail sales saw their first monthly rise since last November. Following a shallower revised 0.4 percent fall in March, volumes rebounded with a much larger than expected 2.3 percent surge, the sharpest increase since October 2016. However, unfavourable calendar effects still saw unadjusted annual growth slide from 1.7 percent to 1.2 percent.

Some pick-up had been long overdue but, after four successive monthly declines, the level of sales now stands at a new record high. Compared with their first quarter average, purchases were up a very solid 2.0 percent and look set to make a positive contribution to overall economic growth this quarter.

Ironically, the jump in demand has come at a time when consumer confidence, which is still historically firm, has started to slip. This may make for some downside risk to the May data and, of course, the provisional figures themselves are subject to sometimes sizeable revision. Still, as they currently stand, the April results are the first really strong signal on German household spending in a long while and will certainly be met with some relief at the ECB.

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.