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 5/13/08 For Apr 2008 | |||||||||||||||||||||||||
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Highlights
Retail sales in April completely surprised the markets on the upside once weak auto sales were discounted. Sales were strong across the board with the key exceptions of autos and gasoline. Overall retail sales fell back 0.2 percent in March, following a 0.2 percent rebound in March. The headline figure came in a little worse than the consensus forecast for a 0.1 percent dip. Excluding motor vehicles, however, retail sales jumped 0.5 percent in March after rising 0.4 percent the month before. The market had forecast a 0.3 percent gain. When excluding both motor vehicles and gasoline, sales actually surged 0.6 percent, after increasing 0.2 percent in March.
Today's retail sales report shows a much stronger consumer sector than almost anyone expected. Additionally, import prices spiked in today's release for that indicator. The bottom line is that there will be upward pressure on interest rates and this will reduce the odds of further ease by the Fed. Equities will have to balance the good news of strong sales versus the bad news of upward pressure on interest rates.
For overall retail sales in April, weakness was led by a 2.8 percent drop in motor vehicle sales and a 0.4 percent dip in gasoline sales. Also, the minor component of miscellaneous store retailers declined 1.2 percent for April. But strength was widespread outside of these categories. The strongest gains were in building materials and in electronics, up 1.9 percent and 1.4 percent, respectively. Other notable increases were in food services & drinking places, food & beverage stores, and in general merchandise.
Overall retail sales on a year-on-year basis in April was unchanged at up 2.0 percent. Excluding motor vehicles, the year-on-year advance rose to up 4.5 percent from up 3.6 percent in March. Excluding both motor vehicle and gasoline sales, the year-on-year rate improved to up 2.8 percent in April from up 1.5 percent in the prior month.
Retail sales in March surprised the markets on the upside but strength was mostly in the essentials, including higher priced gasoline. Retail sales rebounded a partial 0.2 percent in March, following a 0.4 percent fall in February. Excluding motor vehicles, retail sales ticked back up 0.1 percent after declining 0.1 percent the month before. When excluding both motor vehicles and gasoline, sales were flat, after losing 0.1 percent in February. More recent data have been mixed on the strength of consumer spending. Domestic motor vehicle sales in April fell to a 10.5 million unit annualized pace from 11.0 million the month before. However, some retailers have reported modest improvement in year-ago sales for April but it is not yet a widespread trend. Once again, one should watch to see if higher gasoline prices boost nominal retail sales but cut into other categories because of less money left over for the consumer after filling the gas tank.
Retail sales Consensus Forecast for April 08: -0.1 percent
Range: -0.7 to +0.3 percent
Retail sales excluding motor vehicles Consensus Forecast for April 08: +0.3 percent
Range: -0.4 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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