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 8/13/08 For Jul 2008 | |||||||||||||||||||||||||
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Highlights
July retail sales remained modestly healthy outside of autos, which declined. Consumer spending is holding up reasonably well despite the ending of income tax rebates. Overall retail sales slipped 0.1 percent in July, following a 0.3 percent rise the month before. The headline number sales number was just below the market forecast for no change. Excluding motor vehicles, retail sales posted a moderate 0.4 percent gain in July, after a 0.9 surge in June. The consensus forecast for ex-auto sales was for a 0.5 percent boost. Higher gasoline sales were one of the stronger components, but other components were still positive overall. When excluding both motor vehicles and gasoline, sales rose 0.3 percent, after increasing 0.4 percent the month before. The July retail sales report shows consumers still spending but a key issue is that after inflation, sales are probably flat.
Weakness in July was led by a 2.4 percent drop in motor vehicle sales. Strength was seen in nonstore retailers, up 1.1 percent; furniture & home furnishings, up 1.0 percent; electronics & appliances, up 0.8 percent; and gasoline stations, up 0.8 percent.
Overall retail sales on a year-on-year basis in July were up 2.6 percent while excluding motor vehicles, the year-on-year gain came in at up 6.0 percent. Excluding motor vehicles and gasoline, the year-ago pace was 3.4 percent.
The July sales report looks soft at the headline level but weakness was concentrated in motor vehicles-a components still reeling from high gasoline prices and consumer uncertainty about the economy. Outside of autos and gasoline, the 0.3 percent gain looks decent. But after discounting inflation, spending is close to flat. This is pointing to slowing in GDP growth in the third quarter. But all considered, the bright side is that it could have been worse.
Retail sales for June were disappointing with income tax rebate checks apparently going mostly into drivers' gasoline tanks. Overall retail sales posted a modest 0.1 percent in gain in June, following a 0.8 percent boost the month before. Excluding motor vehicles, retail sales increased a strong 0.8 percent in June, after advancing 1.2 percent the month before. However, strength was mostly due to higher gasoline prices. When excluding both motor vehicles and gasoline, sales advanced 0.2 percent, after rising 0.8 percent in May. More recently, unit new motor vehicle sales tanked in July and consumers are still reeling from high gasoline prices. Outside of gasoline station sales, the prognosis for retail sales is not good and even gasoline station sales could stall if drivers are staying off the roads more.
Retail sales Consensus Forecast for July 08: 0.0 percent
Range: -0.5 to +0.8 percent
Retail sales excluding motor vehicles Consensus Forecast for July 08: +0.5 percent
Range: +0.2 to +0.8 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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