| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Retail Sales - M/M | -0.1% | -0.3% to 0.3% | 0.3% | -0.1% | -0.2% |
| Ex-Vehicles - M/M | -0.1% | -0.3% to 0.4% | 0.2% | 0.1% | 0.0% |
| Ex-Vehicles & Gas - M/M | 0.1% | -0.1% to 0.4% | 0.6% | 0.1% |
Highlights
The dollar value of retail and food services sales surprise to the upside with a 0.3 percent increase in November after a small downward revision to down 0.2 percent in October. The consensus in the Econoday survey of forecasters is down 0.1 percent. The higher-than-expected reading is mainly due to the motor vehicle component.
Motor vehicle and parts sales rose 0.5 percent in November after declining 1.1 percent in October. Unit sales of motor vehicles showed some moderation in November at 15.3 million units, but were not significantly lower than the 15.4 million units in October. Lack of inventory related to the United Auto Workers' strike at domestic auto plants may have helped keep prices up. Motor vehicle sales accounted for 19.1 percent of the retail total, and is the largest component in spending in November. Excluding motor vehicles only, retail and food services sales rose 0.2 percent in November from October.
Gasoline station sales fell 2.9 percent in November, reflecting the continuing decline in prices. Gasoline station sales accounted for 7.7 percent of total retail spending in November. Excluding gasoline, retail and food services sales rose 0.6 percent in November. Excluding both motor vehicles and gasoline, retail and food services also rose 0.6 percent in November from the prior month.
Most other components in retail spending were higher in November. Those that were down accounted for only a small portion of dollars spent. The second largest share of spending was 16.8 percent in nonstore retailers which rose 1.0 percent in November from October. The third largest share of spending was 13.4 percent for restaurants which saw an increase of 1.6 percent in November from the prior month.
In November, spending was 0.2 percent higher for food and beverage stores, up 0.6 percent for clothing and accessories, up 0.9 percent for furniture, and up 1.3 for sporting goods. Sales at general merchandise stores were down 0.2 percent in November with the subcategory of department store sales down 2.5 percent.
Overall, it seems that consumers are getting out more and are willing to spend on personal goods and services, but may be reserving more of their gift buying to the online sector with easier bargain hunting options and ease of delivery.
Motor vehicle and parts sales rose 0.5 percent in November after declining 1.1 percent in October. Unit sales of motor vehicles showed some moderation in November at 15.3 million units, but were not significantly lower than the 15.4 million units in October. Lack of inventory related to the United Auto Workers' strike at domestic auto plants may have helped keep prices up. Motor vehicle sales accounted for 19.1 percent of the retail total, and is the largest component in spending in November. Excluding motor vehicles only, retail and food services sales rose 0.2 percent in November from October.
Gasoline station sales fell 2.9 percent in November, reflecting the continuing decline in prices. Gasoline station sales accounted for 7.7 percent of total retail spending in November. Excluding gasoline, retail and food services sales rose 0.6 percent in November. Excluding both motor vehicles and gasoline, retail and food services also rose 0.6 percent in November from the prior month.
Most other components in retail spending were higher in November. Those that were down accounted for only a small portion of dollars spent. The second largest share of spending was 16.8 percent in nonstore retailers which rose 1.0 percent in November from October. The third largest share of spending was 13.4 percent for restaurants which saw an increase of 1.6 percent in November from the prior month.
In November, spending was 0.2 percent higher for food and beverage stores, up 0.6 percent for clothing and accessories, up 0.9 percent for furniture, and up 1.3 for sporting goods. Sales at general merchandise stores were down 0.2 percent in November with the subcategory of department store sales down 2.5 percent.
Overall, it seems that consumers are getting out more and are willing to spend on personal goods and services, but may be reserving more of their gift buying to the online sector with easier bargain hunting options and ease of delivery.
Market Consensus Before Announcement
November sales are expected to slip 0.1 percent to match October's 0.1 percent dip that followed September's 0.9 percent jump.
Definition
Retail sales measure the total receipts at stores that sell merchandise and related services to final consumers. Sales are by retail and food services stores. Data are collected from the Monthly Retail Trade Survey conducted by the U.S. Bureau of the Census. Essentially, retail sales cover the durables and nondurables portions of consumer spending. Consumer spending typically accounts for about two-thirds of GDP and is therefore a key element in economic growth. Of special attention is the control group; this is an input into the consumer spending component of GDP and excludes food services, autos, gasoline and building materials.
Description
Consumer spending accounts for more than two-thirds of the economy, so if you know how the consumer sector is faring, you'll have a pretty good handle on where the economy is headed. Needless to say, that's 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 becomes excessive 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.
Balance was achieved through much of the nineties. For this reason alone, investors in the stock and bond markets enjoyed huge gains during the bull market of the 1990s. Retail sales growth did slow down in tandem with the equity market in 2000 and 2001, but then rebounded at a healthy pace between 2003 and 2005. By 2007, the credit crunch was well underway and starting to undermine growth in consumer spending. Later in 2008 and 2009, the rise in unemployment and loss of income during the recession also cut into retail sales. Spending rebounded in 2010 and 2011 but was constrained by lingering high unemployment.
Importance
Retail sales are a major indicator of consumer spending trends because they account for nearly one-half of total consumer spending and approximately one-third of aggregate economic activity. The control group for retail sales (which excludes restaurants, vehicles, gasoline and building materials) is an input into GDP and offers a narrower look at nondiscretionary spending.
Interpretation
Strong retail sales are bearish for the bond market, but favorable for the stock market, particularly retail stocks. Sluggish retail sales could lead to a bond market rally, but will probably be bearish for the stock market.
Retail sales are subject to substantial month-to-month variability. In order to provide a more accurate picture of the consumer spending trend, follow the three-month moving average of the monthly percent changes or the year-over-year percent change. Retail sales are also subject to substantial monthly revisions, which makes it more difficult to discern the underlying trend. This problem underscores the need to monitor the moving average rather than just the latest one month of data.
In an attempt to avoid the more extreme volatility, economists and financial market participants monitor retail sales less autos (actually less auto dealers which include trucks, too.) Motor vehicle sales are excluded not because they are irrelevant, but because they fluctuate more than overall retail sales. In recent years, many analysts consider the core series to be total less autos and less gasoline service station sales. The latter is volatile due to swings in oil and gasoline prices.
Price changes affect the real value of retail sales. Watch for changes in food and energy prices which could affect two large components among nondurable goods stores: food stores and gasoline service stations. Large declines in food or energy prices could lead to declines in store sales which are due to price, not volume. This would mean that real sales were stronger than nominal dollar sales.
Since economic performance depend on real, rather than nominal growth rates, compare the trend growth rate in retail sales to that in the CPI for commodities.
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 becomes excessive 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.
Balance was achieved through much of the nineties. For this reason alone, investors in the stock and bond markets enjoyed huge gains during the bull market of the 1990s. Retail sales growth did slow down in tandem with the equity market in 2000 and 2001, but then rebounded at a healthy pace between 2003 and 2005. By 2007, the credit crunch was well underway and starting to undermine growth in consumer spending. Later in 2008 and 2009, the rise in unemployment and loss of income during the recession also cut into retail sales. Spending rebounded in 2010 and 2011 but was constrained by lingering high unemployment.
Importance
Retail sales are a major indicator of consumer spending trends because they account for nearly one-half of total consumer spending and approximately one-third of aggregate economic activity. The control group for retail sales (which excludes restaurants, vehicles, gasoline and building materials) is an input into GDP and offers a narrower look at nondiscretionary spending.
Interpretation
Strong retail sales are bearish for the bond market, but favorable for the stock market, particularly retail stocks. Sluggish retail sales could lead to a bond market rally, but will probably be bearish for the stock market.
Retail sales are subject to substantial month-to-month variability. In order to provide a more accurate picture of the consumer spending trend, follow the three-month moving average of the monthly percent changes or the year-over-year percent change. Retail sales are also subject to substantial monthly revisions, which makes it more difficult to discern the underlying trend. This problem underscores the need to monitor the moving average rather than just the latest one month of data.
In an attempt to avoid the more extreme volatility, economists and financial market participants monitor retail sales less autos (actually less auto dealers which include trucks, too.) Motor vehicle sales are excluded not because they are irrelevant, but because they fluctuate more than overall retail sales. In recent years, many analysts consider the core series to be total less autos and less gasoline service station sales. The latter is volatile due to swings in oil and gasoline prices.
Price changes affect the real value of retail sales. Watch for changes in food and energy prices which could affect two large components among nondurable goods stores: food stores and gasoline service stations. Large declines in food or energy prices could lead to declines in store sales which are due to price, not volume. This would mean that real sales were stronger than nominal dollar sales.
Since economic performance depend on real, rather than nominal growth rates, compare the trend growth rate in retail sales to that in the CPI for commodities.
