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 8/13/07 For Jul 2007 | |||||||||||||||||||||||||
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Highlights
Retail sales rebounded moderately in July with strength broad-based. Overall retail sales increased 0.3 percent in July, following a 0.7 percent drop in June. The July number was a little above the market forecast for a 0.2 percent increase. Excluding auto sales, retail sales rebounded 0.4 percent in July, following a 0.2 percent decline in June. The consensus had forecast a 0.4 percent rise in sales excluding motor vehicles. Excluding service station sales, retail sales posted a 0.4 percent gain in July, following a 0.7 percent dip in June. Excluding both motor vehicles and gas stations, sales advanced 0.6 percent, following no change the prior month.
July's resurgence in overall sales was led by clothing, up 1.3 percent; electronics, up 1.0 percent, and general merchandise (mainly department stores), up 0.9 percent. Weakness was primarily in gasoline sales and motor vehicles sales which fell 0.8 percent and 0.3 percent, respectively. The small category of miscellaneous store retailers declined 2.8 percent. Because much of the weakness in gasoline sales was price related (price decline), consumer spending is actually stronger once that factor is taken into account. The dip in motor vehicles was no surprise given the earlier reported weakness in sales by the manufacturers.
Year-on-year, overall retail sales in July declined to up 3.2 percent from up 4.0 percent the month before. Excluding motor vehicles, July's year-on-year sales stood at up 4.4 percent, compared to up 4.5 percent in June. Excluding motor vehicles and gas station sales, year-on-year sales in July rose to up 5.2 percent from up 4.9 percent the prior month.
Today's report shows the consumer sector remaining relatively strong and outside of autos, perhaps even a little stronger than the Fed would like. Today's numbers should boost interest rates and the dollar. Equities could go either way but positive sentiment from Europe and Asia could have more impact.
Retail Sales fell 0.9 percent in June, following a 1.5 percent surge in May. Weakness was widespread but led by declines in motor vehicle sales, furniture, and building materials. Excluding auto, retail sales fell 0.4 percent in June while excluding service station sales, retail sales decreased 0.9 percent. Excluding both motor vehicles and gas stations, sales declined 0.4 percent. While a slowing in the consumer sector would be good from the Fed's perspective, it is important that it only moderate - not fall off a cliff. A rebound in July is needed to sooth the markets.
Retail sales Consensus Forecast for July 07: +0.2 percent
Range: -0.3 to +0.4 percent
Retail sales excluding motor vehicles Consensus Forecast for July 07: +0.4 percent
Range: +0.1 to +0.5 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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