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 12/13/07 For Nov 2007 | |||||||||||||||||||||||||
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Highlights
Retail sales were surprisingly strong in November, posting a 1.2 percent gain overall, following a 0.2 percent rise the prior month. The headline figure was sharply above the consensus forecast for a 0.6 percent spurt in sales for the latest month. Excluding motor vehicles, the increase was a robust 1.8 percent, after a 0.4 percent boost in October. The market had projected a 0.7 percent gain for sales excluding motor vehicles in November. Once again, gasoline was the key factor in the gain as gasoline sales spiked 6.8 percent after a 3.1 percent rise in October. Nonetheless, sales excluding gasoline rose 0.6 percent in November, compared to a 0.1 percent decline in October. Excluding both motor vehicles and gasoline, retail sales increased a robust 1.1 percent in November, but showing improvement over the modest 0.1 percent uptick in October. For the latest month, strength was widespread but led by gasoline, clothing, and electronics. Weakness was led by motor vehicles. Overall, the November retail sales report completely rewrites views on the strength of the consumer sector.
Overall retail sales on a year-on-year basis, increased to up 6.3 percent from a 5.0 percent rate in October. Excluding motor vehicles, the year-on-year pace increased to up 7.4 percent from 5.3 percent in October. Excluding both motor vehicle and gasoline sales, the year-on-year rate advanced to up 5.3 percent from up 3.8 percent rate in October.
Today's report indeed does rewrite views on the strength of the consumer sector and on how much slack there is in the economy. Economists will be revising up their forecasts for fourth quarter GDP. Fears of recession appear very overblown this morning. The Fed was right to be cautious about cutting rates - especially taking into account today's spike in producer prices. Bond markets will be bumping up rates on today's news. Equities should like the fact that the economy is holding up but higher rates could push stocks downward along with concern that the Fed's credit crunch fix with special credit auctions may not help much.
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. More recently, retailers generally have announced soft sales for November and weekly store sale reports are also corroborating a below par month. But still, one should look for a jump in overall sales and for ex-autos with a spike in gasoline sales the reason.
Retail sales Consensus Forecast for November 07: +0.6 percent
Range: +0.1 to +0.9 percent
Retail sales excluding motor vehicles Consensus Forecast for November 07: +0.7 percent
Range: +0.4 to +1.0 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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