IT: Retail Sales

Thu Jun 07 03:00:00 CDT 2018

Consensus Actual Previous Revised
Month over Month 0.2% -0.7% -0.2%
Year over Year -4.6% 2.9% 3.0%

Retailers had a poor start to the second quarter. Excluding autos, nominal sales fell a further 0.7 percent on the month, their fourth decline since last November. Unadjusted annual growth slumped from 3.0 percent to minus 4.6 percent, biased down by calendar effects but still indicative of what continues to be a sluggish trend in household demand.

Volume sales were even weaker, contracting a monthly 0.9 percent after a 0.5 percent drop in March. However, the fall here was at least wholly attributable to food where purchases slumped fully 2.4 percent. This masked a minimal 0.1 percent increase in the non-food sector, only its second advance in the last five months.

The April results put overall volume sales 0.9 percent below their average level in the first quarter. Following a 0.3 percent quarterly contraction at the start of the year, this provides early warnings signs of a weak second quarter too. A sizeable deterioration in consumer confidence in May was probably steepened by the political crisis but also argues against any significant pick-up last month.

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.