IT: Retail Sales

Wed May 09 03:00:00 CDT 2018

Consensus Actual Previous
Month over Month 0.1% -0.2% 0.4%
Year over Year 2.9% -0.6%

Retailers had a poor March as sales (ex-autos) declined for the third time in the last four months. A 0.2 percent drop versus February was the smallest over the period but still left purchases at their second weakest level since last October. Annual sales growth was 2.9 percent, up from 0.1 percent but flattered by calendar effects.

Volumes performed worse, decreasing a monthly 0.6 percent although at least that followed a 1.2 percent spike in mid-quarter. Non-food was down a disproportionately sharp 0.8 percent and so fully reversed February's advance, while food fell a smaller 0.1 percent following a 1.9 percent jump last time.

The March data put first quarter volumes 0.3 percent below their fourth quarter level and so ensured another negative contribution from the sector to real GDP growth over the period. Worryingly, if the political uncertainty prompted by March's general election did hit spending plans, the latest breakdown in talks between the major parties also argues against any improvement in the current 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.