CH: Adjusted real retail sales

Wed May 02 02:15:00 CDT 2018

Consensus Actual Previous
Y/Y % change 0.3% -1.8% -0.2%

Retailers had a poor March. Sales volumes edged just 0.1 percent higher on the month, albeit following a firmer revised 0.5 percent increase in February. This put workday adjusted purchases 1.8 percent below their level a year ago, down from a 0.2 percent drop last time.

Disappointingly, monthly headline growth was wholly attributable to food, drink and tobacco where sales climbed 0.2 percent. By contrast, excluding auto fuel, non-food demand contracted 0.8 percent, its fourth decrease in as many months. Clothing and footwear (minus 6.6 percent) did most of the damage.

March's sluggish results left overall sales for the first quarter of the year unchanged from their level in the fourth quarter when they advanced 0.6 percent versus July-September. Indeed, first quarter discretionary spending was down a full 1 percent. Prospects for the current quarter do not look particularly bright either as a slide in April buying intentions (see today's SECO consumer climate calendar entry) warns of a soft start to the period.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The survey comprises around 4,000 companies with the small-sized firms asked to provide monthly turnover data on a quarterly basis. Statistics are provided in both nominal and volume measures; the latter is the more important for financial markets. The headline figure is the annual growth in sales volumes adjusted for differences in trading days. Seasonally adjusted monthly changes are also provided. Details are limited in the first estimate but a more complete picture is provided with the following month's release.

Consumer spending accounts for a large portion of the economy, so if you know what consumers are up to, you will have a pretty good idea on where the economy is headed. Needless to say, that is a big advantage for investors. 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.