| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Retail Sales - M/M | 0.4% | 0.0% to 0.6% | 0.0% | 0.7% | 0.6% |
| Ex-Vehicles - M/M | 0.2% | -0.1% to 0.5% | 0.2% | 1.1% | 0.9% |
| Ex-Vehicles & Gas - M/M | 0.1% | 0.0% to 0.5% | -0.1% | 1.0% | 0.7% |
Highlights
Retail and food services sales are unchanged in April from March and revised slightly lower to up 0.6 percent in March from February. The percent change in April is below the consensus of up 0.4 percent in the Econoday survey of forecasters. Retail sales excluding motor vehicles are up 0.2 percent in April from March and match the consensus in the Econoday survey. Retail sales excluding motor vehicles and gasoline are down 0.1 percent in April from the prior month and below the consensus of up 0.1 percent in the Econoday survey.
The dollar value of sales of motor vehicles is down 0.8 percent in April where the slight uptick in the number of units sold did not translate into a higher dollar amount. Sales at gasoline stations are up 3.1 percent in April from March and likely reflects both higher prices at the pump and a greater sales volume during the spring holiday travel period.
In other components, it appears that the timing of the Easter holiday at the very end of March and coincidence with school spring vacations caused a shift in some spending patterns for seasonal merchandise. In particular, sales at general merchandise stores dipped 0.3 percent in April after rising 1.3 percent in March, and nonstore retailers which include online shopping declined of 1.2 percent in April after increasing 2.5 percent in March. On the other hand, the warm weather in April sent shoppers out for clothing and accessories with a 1.6 percent gain at those stores after dipping 2.0 percent in the prior month.
The arrival of tax refunds may have had an impact on sales for electronics and appliances with an increase of 1.5 percent in April after a decline of 3.1 percent in March. This may also have continued to support sales of building materials and garden supplies with a 0.5 percent increase in April after rising 0.4 percent in March. Consumers have been active in post-winter projects like home repairs and gardening.
Too much emphasis should not be placed on the April retail sales numbers in terms of a pull back for the consumer in the second quarter of 2024. This is only one month's data. It is often difficult to assess retail spending over the March/April period due to holiday timing which makes seasonal adjustment a challenge. It is better to read the two months together. In which case, consumers are spending modestly and consistently over time.
The dollar value of sales of motor vehicles is down 0.8 percent in April where the slight uptick in the number of units sold did not translate into a higher dollar amount. Sales at gasoline stations are up 3.1 percent in April from March and likely reflects both higher prices at the pump and a greater sales volume during the spring holiday travel period.
In other components, it appears that the timing of the Easter holiday at the very end of March and coincidence with school spring vacations caused a shift in some spending patterns for seasonal merchandise. In particular, sales at general merchandise stores dipped 0.3 percent in April after rising 1.3 percent in March, and nonstore retailers which include online shopping declined of 1.2 percent in April after increasing 2.5 percent in March. On the other hand, the warm weather in April sent shoppers out for clothing and accessories with a 1.6 percent gain at those stores after dipping 2.0 percent in the prior month.
The arrival of tax refunds may have had an impact on sales for electronics and appliances with an increase of 1.5 percent in April after a decline of 3.1 percent in March. This may also have continued to support sales of building materials and garden supplies with a 0.5 percent increase in April after rising 0.4 percent in March. Consumers have been active in post-winter projects like home repairs and gardening.
Too much emphasis should not be placed on the April retail sales numbers in terms of a pull back for the consumer in the second quarter of 2024. This is only one month's data. It is often difficult to assess retail spending over the March/April period due to holiday timing which makes seasonal adjustment a challenge. It is better to read the two months together. In which case, consumers are spending modestly and consistently over time.
Market Consensus Before Announcement
April sales are expected to rise 0.4 percent versus March's better-than-expected 0.7 percent increase. March's ex-auto sales jumped 1.1 percent with April expected to rise 0.2 percent; April ex-auto ex-gas is expected to gain only 0.1 percent.
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.
