Retail sales measure the total receipts at stores that sell durable and nondurable goods. Consumer spending accounts for two-thirds of GDP and is therefore a key element in economic growth. Why Investors Care
| Released on 2/14/07 For Jan 2007 | |||||||||||||||||||||||||
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Highlights
Retail sales in January came in weaker than expected but after special factors were healthy. Retail sales were unchanged in January, following a 1.2 percent surge in December. December's overall number was below the market projection for a 0.3 percent increase in retail sales. Weakness was primarily in motor vehicles and in gasoline sales. Excluding motor vehicles, retail sales posted a 0.3 percent boost in January, following a 1.3 percent surge in December. The consensus had forecast a 0.3 percent increase in retail sales excluding motor vehicles. As in recent months, swings in gasoline prices have impacted dollar volume retail sales. Gasoline station sales fell 0.7 percent in January, following a 3.6 percent jump in December. Excluding gas station sales, retail sales for January edged up 0.1 percent, following a 1.0 percent boost in December. Excluding both gas station and motor vehicles components, retail sales increased 0.5 percent in January, following a 1.0 percent rise in December.
Although retail sales were flat overall in January, most components posted healthy gains. Gains were seen in furniture, up 0.8 percent; building materials, up 0.8 percent; food & beverage stores, up 0.7 percent; health & personal care, up 0.6 percent; clothing, up 1.0 percent; sporting goods, up 0.5 percent; general merchandise, up 1.3 percent; and non-store retailers, up 0.5 percent.
Declines were seen in motor vehicle dealers, down 1.3 percent; electronics, down, 1.2 percent; gasoline stations, down 0.7 percent; and food services, down 0.7 percent.
Year-on-year, overall retail sales in January were up 2.3 percent, down from up 5.7 percent in December. Excluding motor vehicles, January's year-on-year sales were up 3.4 percent compared to 6.0 percent in December. Excluding motor vehicles and gas station sales, year-on-year sales in January were up 4.3 percent - down from up 6.3 percent in December.
Today's numbers should support the dollar and U.S. interest rates. Equities should see this as a positive but it's hard to tell in advance whether good news is goods today or not. Nonetheless, the January retail sales report provides a background of a healthy consumer sector heading into Fed Chairman Bernanke's testimony before Congress today and tomorrow.
Retail Sales surged 0.9 percent in December, following a 0.6 percent boost in November. Excluding motor vehicles, retail sales spiked 1.0 percent in December, following a 0.7 percent jump in November. Some of December's boost was due to a rebound in gasoline prices. Oil prices have rebounded since mid-January but it is not clear how the increase averaged out for the month and impact gasoline prices. Since the consumer has been the strongest sector and is probably one of the key concerns for the Fed, it will bear close watching how consumer spending is doing - especially after discounting autos and gasoline. A modest ex-autos, ex-service stations sales figure would suit the Fed and the markets.
Retail sales Consensus Forecast for January 07: +0.3 percent
Range: 0.0 percent (flat) to +0.6 percent
Retail sales excluding motor vehicles Consensus Forecast for January 07: +0.3 percent
Range: 0.0 percent (flat) to +0.6 percent
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Nearly 75 percent of the time, changes in monthly retail sales are between +1 percent and -1 percent. However, there are many months in which the monthly change falls outside that range. Most of the time, excessive increases or decreases are due to higher/lower spending on motor vehicle sales. Year-over-year changes in retail sales can be volatile as well, but tend to be smoother than monthly changes. |
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