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 9/14/07 For Aug 2007 | |||||||||||||||||||||||||
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Highlights
Retail sales were mixed in August and point to a slowing in consumer spending for the month. Overall retail sales posted a 0.3 percent gain in August, following a 0.5 percent boost in July. August's figure was below the market forecast for a 0.6 percent increase. Strength was led by autos. Weakness was led by gasoline sales, which were pulled down by lower prices, and by building materials, which continue to suffer from the decline in the housing sector. Excluding auto sales, retail sales fell 0.4 percent in August, following a 0.7 percent gain in July. The consensus had projected a 0.2 percent increase in sales excluding motor vehicles. Excluding service station sales, retail sales came in with a 0.6 percent boost in August, equaling July's increase. Excluding both motor vehicles and gas stations, sales slipped 0.1 percent, following a 0.8 percent jump in July.
August's increase in overall sales was led by motor vehicles, up 2.8 percent; furniture, up 0.5 percent, and electronics, up 0.4 percent. Weakness was primarily in gasoline sales and building materials which fell 2.4 percent and 1.0 percent, respectively.
While August numbers came in softer than expected, July's overall gain was revised up to a 0.5 percent increase from the initial estimate of a 0.3 percent increase. However, June was revised down slightly to a 0.8 percent decline from the prior estimate of a 0.7 percent decrease.
Year-on-year, overall retail sales in August rose to up 3.7 percent from up 3.6 percent the month before. Excluding motor vehicles, August's year-on-year sales dropped to up 3.9 percent from up 4.9 percent in July. Excluding motor vehicles and gas station sales, year-on-year sales in August declined to up 4.9 percent from up 5.6 percent in July.
Today's report is a little stronger than at face value. Gasoline was pulled down by lower prices and real sales are stronger than nominal. Also, July numbers were revised up - especially for non-autos. Nonetheless, the overall tenure of the report is that consumer spending slowed somewhat in August. The bond markets will like the numbers and equities may also since it boosts the view that the Fed will ease next week. But looking ahead, July and August numbers combined show a strong third quarter for the consumer and will likely boost GDP to over 3 percent annualized growth, barring any sharp drop in spending in September.
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. Excluding auto sales, retail sales rebounded 0.4 percent in July, following a 0.2 percent decline in June. Excluding both motor vehicles and gas stations, sales advanced 0.6 percent, following no change the prior month. More recently, unit new motor vehicles sales bumped up in August and we will likely see that show up in the retail sales numbers. Retail sales will be the last major indicator on the consumer sector before the Fed's September 18 FOMC meeting.
Retail sales Consensus Forecast for August 07: +0.6 percent
Range: +0.1 to +0.9 percent
Retail sales excluding motor vehicles Consensus Forecast for August 07: +0.2 percent
Range: -0.1 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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