US – Advanced Retail Sales

Released by: US Census Bureau (monthly report)

The headline figure is reported as a percentage change from the previous month.
The retail sales figure is also reported excluding automobile sales. As a result of their high cost, auto sales make a substantial contribution to retail sales, accounting for close to 25% of the figure. Consequently, variations in automobile sales can produce high fluctuations in the report. Auto sales are also subject to seasonal changes, thus easily distorting trends. A more accurate picture of retail sales can be achieved, therefore, by removing the auto component.

Why is it important?

Consumer spending constitutes two thirds of GDP and is consequently a major component in economic growth. Retail Sales accounts for one third of consumer spending, meanwhile, and hence can be considered a reasonable measure of consumer demand in advance of the release of GDP data.

The data in this report therefore has the potential to substantially move the financial markets, particularly stocks in the retail sector. Furthermore, the data is released swiftly, following the month to which it pertains by no more than two weeks.
Generally, a strong (positive) figure would prove beneficial for the financial markets, as it indicates solid economic growth. Ideally, the economy walks a finely balanced line between solid growth and excessive growth. Retail Sales that are too strong, therefore, can create inflationary worries.
The figures can also help to paint a picture about different types of businesses within the retail sector and such trends can be used to identify specific trading opportunities ahead of company’s reports.

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