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 11/14/07 For Oct 2007 | |||||||||||||||||||||||||
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Highlights
Retail sales came in on the soft side for October, up 0.2 percent overall and following a 0.7 percent gain the month before. Excluding motor vehicles, October sales advanced a modest 0.2 percent, following a 0.3 percent rise in September. Gasoline unfortunately once again posted a steep increase, up 0.8 percent following a 1.8 percent jump in September. Excluding both vehicles and gasoline, retail sales inched only 0.1 percent higher in October, following a 0.2 percent gain in September.
Sales of home furniture and home furnishings were especially weak in October with general merchandise and department stores also showing declines. Sales of motor vehicles rose 0.2 percent vs. a 1.8 percent rise in September. On the strong side were sales at restaurants and sales of building materials.
Overall retail sales on a year-on-year basis, rose to 5.2 percent from a 4.9 percent rate in September. Excluding motor vehicles, the year-on-year pace increased to 5.2 percent from 4.7 percent the prior month. However, much of the latest advance was due to higher gasoline prices. Excluding both motor vehicles and gasoline, the year-on-year rate slipped to 3.9 percent, down from a 4.1 percent rate in September.
Retail sales in October show the consumer sector continuing to muddle along-not particularly weak but not robust either. The numbers probably suit the Fed just fine with the consumer holding up well enough to not be dragging down the overall economy but soft enough to have some constraining effect on inflation-at least outside of the energy sector. Bonds should like the numbers but equities may be uncertain. But today's favorable PPI report should provide an overall favorable mood for the markets along with the moderate retail sales numbers.
Retail sales were unexpectedly strong in September with a 0.6 percent boost, following a 0.3 percent gain in August. 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. 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. More recently, gasoline prices have risen significantly and may boost the headline number. However, weekly store sales numbers have been very soft, and core retail sales are likely to be sluggish.
Retail sales Consensus Forecast for October 07: +0.2 percent
Range: -0.1 to +0.5 percent
Retail sales excluding motor vehicles Consensus Forecast for October 07: +0.3 percent
Range: +0.1 to +0.4 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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