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 10/12/07 For Sep 2007 | |||||||||||||||||||||||||
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Highlights
Retail sales in September surprised the markets with better-than-expected numbers - especially after recently soft chain store sales numbers. The numbers will sooth Fed fears over a consumer sector that might have been slowing too much. Overall retail sales rose 0.6 percent in September, following a 0.3 percent gain in August. The boost in September was well above the market forecast for a 0.3 percent increase. September's increase was led by gasoline station sales, motor vehicles, and electronics. Excluding auto sales, retail sales rose 0.4 percent in September, following a 0.4 percent drop in August. The consensus had expected a 0.3 percent increase in sales excluding motor vehicles. Excluding service station sales, retail sales advanced 0.4, following a 0.6 percent gain the month before. Excluding both motor vehicles and gas stations, retail sales posted a more moderate 0.2 percent gain, following a 0.1 percent dip the month before.
September's increase in overall sales was led by gasoline sales, up 2.0 percent; motor vehicles, up 1.2 percent; and electronics, up 0.9 percent. Also strong were food & beverage stores, health & personal care stores, and nonstore retailers. Weakness was primarily in miscellaneous store retailers and sporting goods, down 1.3 percent and 0.7 percent, respectively. Furniture stores, clothing stores, and general merchandise stores also were weak.
Year-on-year, overall retail sales in September jumped to up 5.0 percent from up 3.8 percent in August. Excluding motor vehicles, the year-on-year sales improved to up 5.1 percent from up 3.8 percent in August. Excluding motor vehicles and gas station sales, year-on-year sales in September slipped to up 4.5 percent from up 4.7 percent in August.
Today's report is not as strong as the headline number. Sales were boosted in part by higher gasoline prices. Nonetheless, the overall picture is one of moderately healthy sales. September retail sales do not portray a collapsing consumer sector - merely one that is moderating. The numbers will not add to the argument that the Fed should ease further at the end of the month.
Retail sales in August pointed to a slowing in consumer spending for the month with overall retail sales rising 0.3 percent, following a 0.5 percent boost in July. But there were special factors with the biggest being comparison with a strong July - at least for "core" retail sales. The August gain was led by autos. Weakness was in 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 both motor vehicles and gas stations, sales slipped 0.1 percent, following a 0.8 percent jump in July. So, on average the past two months show a moderately healthy consumer sector. The September numbers will be especially important to see if the consumer has shaken off credit crunch worries from August.
Retail sales Consensus Forecast for September 07: +0.3 percent
Range: -0.3 to +0.5 percent
Retail sales excluding motor vehicles Consensus Forecast for September 07: +0.3 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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