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 2/13/08 For Jan 2008 | |||||||||||||||||||||||||
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Highlights
Retail sales rebounded in January but strength was primarily in motor vehicles and gasoline. Retail sales rose 0.3 percent in January, following a 0.4 percent drop in December. The headline sales number came in well above market expectations for a 0.3 percent fall in sales in January. Excluding motor vehicles, retail sales also made a comeback and by 0.3 percent, after a 0.3 percent fall in December. The market had forecast a 0.2 percent rebound for sales excluding motor vehicles in December. Sales excluding gasoline edged up 0.1 percent, following a 0.5 percent dive in December. However, excluding both motor vehicles and gasoline, retail sales were flat in January after declining 0.3 percent in December.
By components, January's gain was led by gasoline station sales and motor vehicle sales, up 2.0 percent and 0.6 percent, respectively. Some strength also was seen in food & beverages, up 0.6 percent; clothing, up 1.4 percent; health care, up 0.8 percent; and nonstore retailers, up 0.5 percent. The housing recession clearly is damping some key retail sales components. Weakness was still very pervasive and found in furniture, down 0.5 percent; electronics, down 1.0 percent; building materials, down 1.7 percent; sporting goods, down 1.3 percent; and food services, down 0.5 percent.
Overall retail sales on a year-on-year basis in January improved to up 3.9 percent from up 3.7 percent in December. Excluding motor vehicles, the year-on-year advance slipped to up 4.9 percent from up 5.0 percent in December. Excluding both motor vehicle and gasoline sales, the year-on-year rate fell to up 2.6 percent from up 3.2 percent in December.
Today's report is not great but at least shows that consumer spending is not falling off a cliff. The numbers should sooth equities just a bit.
Retail sales slowed sharply in December, following a strong holiday season start in November. Much of the weakness was in gasoline sales. Retail sales fell 0.4 percent, following a strong 1.0 percent gain in November. Excluding motor vehicles, sales also declined 0.4 percent, after a 1.7 percent jump in November. While many saw the December decline in sales as a sign of recession, that is a suspect conclusion given that the December dip came off such a strong November. The January numbers will give a better perspective on consumer health. The Fed will be watching to see if spending is slowing rather than outright declining.
Retail sales Consensus Forecast for January 08: -0.3 percent
Range: -0.9 to +0.3 percent
Retail sales excluding motor vehicles Consensus Forecast for January 08: +0.2 percent
Range: -0.5 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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