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 5/11/07 For Apr 2007 | |||||||||||||||||||||||||
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Highlights
Retail sales were weak in April, down 0.2 percent vs. expectations for an increase of 0.4 percent and downside expectations for no worse than a flat reading. Upward revisions to March and February take some of the sting out of the report, which otherwise is a disappointment and includes April declines in key categories of motor vehicles and general merchandise. Gasoline stations, benefiting from higher prices, saw a jump. Excluding gas, retail sales posted an even steeper decline of 0.4 percent. Excluding both motor vehicles and gas stations, sales slipped 0.2 percent, following a 0.9 percent surge in March. While April sales were weak, it should be remembered that an early Easter stole sales away from April. On average, consumer spending remains moderately healthy. But we will need to see another month of data - away from Easter - to see the true trend.
Retail sales are down in most categories: motor vehicle dealers, down 1.0 percent; building materials, down 2.3 percent; clothing, down 2.0 percent; sporting goods, down 0.8 percent; general merchandise, down 1.2 percent; and food services, down 0.1 percent.
Not all categories declined. Gains were seen in: furniture, up 1.2 percent; electronics, up, 0.7 percent; food & beverage stores, up 0.5 percent; health & personal care, up 0.9 percent; gasoline stations, up 1.7 percent; miscellaneous stores, up 0.4 percent; nonstore retailers, up 1.8 percent.
Year-on-year, overall retail sales in April fell to up 3.2 percent from up 4.2 percent in March. Excluding motor vehicles, April's year-on-year sales declined to up 3.6 percent, compared to up 4.4 percent in March. Excluding motor vehicles and gas station sales, year-on-year sales in April were up 4.0 percent, compared to up 4.3 percent in March.
The bond market should like today's numbers and equities will certainly have doubts over the strength of the consumer sector. Focus should be on the average of March and April and not April alone. As such, the consumer sector is still moderately healthy.
Retail Sales increased at a robust 0.7 percent in March, following a 0.5 percent rise in February. Even excluding both gas station and motor vehicles components, retail sales increased 0.4 percent in March, following a 0.3 percent rise the prior month. We will likely get some boost from price-related higher gasoline sales. Also in April, motor vehicle sales rebounded slightly and that should be a positive. However, the retail sales component for autos uses different source data than motor vehicles sales and they do not always track each other. On the down side, retail trade employment was notably lower in April - suggesting at least some weakness in some components of retail sales.
Retail sales Consensus Forecast for April 07: +0.4 percent
Range: 0.0 to +0.8 percent
Retail sales excluding motor vehicles Consensus Forecast for April 07: +0.4 percent
Range: -0.1 to +0.7 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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