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 11/14/08 For Oct 2008 | |||||||||||||||||||||||||
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Highlights
Retail sales in October showed the consumer continuing to retreat. Weakness was led by gasoline and autos but declines were widespread. Overall retail sales dropped another 2.8 percent in October, following a 1.3 percent fall in September. The latest decline is the worst on record since this series began in 1992. The headline sales figure was worse than the consensus expectation for a 1.9 percent decline. Excluding motor vehicles, retail sales fell 2.2 percent in October, after a 0.5 percent decrease the prior month. The October ex-auto number came in weaker than the market forecast for a 1.0 percent drop. Excluding motor vehicles and gasoline, retail sales fell 0.5 percent, after declining 0.6 percent in September.
Declines were widespread. The largest drop was for gasoline sales-which fell 12.7 percent on lower prices and lower demand. Motor vehicles also dropped a sizeable 5.5 percent. Declines were also seen in furniture, down 2.5 percent; electronics & appliances, down 2.3 percent; building materials & garden equipment, down 0.4 percent; clothing, down, 1.4 percent; sporting goods, down 1.6 percent; general merchandise, down 0.4 percent; and nonstore retailers, down 1.8 percent.
Gains were hard to find. Miscellaneous store retailer sales rose 0.7 percent while food services & drinking places posted a 0.3 percent rise. Food & beverage store sales were flat.
Overall retail sales on a year-on-year basis in October were down 4.1 percent - compared to down 1.1 percent in September. Excluding motor vehicles, the year-on-year pace came in at up 1.1 percent while excluding motor vehicles and gasoline, the year-ago change stood at up 1.0 percent.
The credit crunch, job losses, and fears of further layoffs are causing consumers to hang on to their cash. If October is a sign, the consumer sector does not appear likely to be doing much to spur economic growth in coming months. This report is only modestly worse than already expected but still should have negative effects on equities and lift bond prices.
Retail sales in September came in far worse than expected, dropping 1.2 percent, following a 0.4 percent decline in August. Excluding motor vehicles, retail sales declined 0.6 percent in September, after a 0.9 percent drop the month before. Excluding motor vehicles and gasoline, retail sales decreased 0.7 percent, after slipping 0.6 percent the month before. Looking ahead, the overall sales figure for October is likely to decline on at least two counts-a sharp drop in gasoline prices during the month and a sizeable fall in unit new motor vehicle sales.
Retail sales Consensus Forecast for October 08: -1.9 percent
Range: -3.2 to -0.6 percent
Retail sales excluding motor vehicles Consensus Forecast for October 08: -1.0 percent
Range: -2.5 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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