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 10/15/08 For Sep 2008 | |||||||||||||||||||||||||
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Highlights
Retail sales in September came in far worse than expected, indicating that the consumer sector is in retreat. Weakness was led by autos. Overall retail sales fell 1.2 percent in September, following a 0.4 percent decline in August. The headline number was far more negative than the consensus forecast for a 0.6 percent drop. Excluding motor vehicles, retail sales declined 0.6 percent in September, after a 0.9 percent drop the month before. The September ex-auto number was worse than the market forecast for a 0.3 percent decline. Excluding motor vehicles and gasoline, retail sales decreased 0.7 percent, after slipping 0.6 percent the month before.
Components were widely negative. Particularly weak were motor vehicles, down 3.8 percent; furniture, down 2.3 percent; and clothing, down, 2.3 percent.
Overall retail sales on a year-on-year basis in September were down 1.0 percent - compared to up 1.5 percent in August. Excluding motor vehicles, the year-on-year gain came in at up 3.6 percent while excluding motor vehicles and gasoline, the year-ago increase stood at 1.6 percent.
The September retail sales report shows a consumer sector that has pulled back over concerns over job losses and overall concern for the economy. Poor earnings reports and a negative Empire State manufacturing report added to today's dour mood for equities. Bond yields are likely to ease due to flight to safety.
Retail sales dropped 0.3 percent in August after a 0.5 percent decline in July. Outside of vehicle sales, which were strong due to GM incentives, August sales showed wide declines. Excluding autos, sales plunged 0.7 percent, a very low reading for this category and following a 0.3 percent rise in July. Excluding both autos and gasoline, retail sales still were notably negative, falling 0.4 percent after rising by the same amount in July. At least two key recent developments point to lower headline sales. Motor vehicle sales fell significantly in September and there were huge gasoline shortages in the southeast due to Hurricane Ike and this will likely pull down gasoline sales.
Retail sales Consensus Forecast for September 08: -0.6 percent
Range: -1.5 to 0.0 percent
Retail sales excluding motor vehicles Consensus Forecast for September 08: -0.3 percent
Range: -0.8 to +0.3 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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