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 1/15/08 For Dec 2007 | |||||||||||||||||||||||||
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Highlights
Retail sales slowed sharply in December, following a strong holiday season start in November. Much of the weakness was in gasoline sales. Retail sales fell 0.4 percent, following strong 1.0 percent gain in November. The headline sales number was below the market projection for no change in (zero percent) in sales for December over November. Excluding motor vehicles, sales posted also declined 0.4 percent, after a 1.7 percent jump in November. The consensus had projected a 0.1 percent decline for sales excluding motor vehicles in November. Sales excluding gasoline slipped 0.2 in December, following a 0.4 percent advance the month before. Excluding both motor vehicles and gasoline, retail sales edged down 0.2 percent in December, after surging 1.6 percent in November. Retail sales were soft in December but not as soft as the headline number. Sales were largely pulled down by gasoline sales although other components were mostly weak. Taking into account the weakness in gasoline and the robust November numbers, the latest month was hardly a disaster but primarily coming off a strong November.
Weakness in December was led by building materials, down 2.9 percent; clothing, down 2.0 percent; sporting goods, down 2.0 percent; electronics, down 1.9 percent; and gasoline sales, down 1.7 percent. Most of these categories had strong gains in November. For December, some strength was seen in miscellaneous stores, nonstore retailers, furniture, food & beverage stores, and in health & personal care.
Overall retail sales on a year-on-year basis in December slowed to up 4.1 percent from up 5.9 percent in November. Excluding motor vehicles, the year-on-year gain decreased to up 5.2 percent from up 7.0 percent in November. Excluding both motor vehicle and gasoline sales, the year-on-year rate eased to up 3.5 percent from up 4.8 percent in November.
Today's report is likely to be seen by many as a sign of recession. While this is possible, the better view for now is that the consumer is coming off really strong November spending. Nonetheless, the numbers will likely encourage talk of a 50 basis point cut in interest rates as likely by the Fed on January 30.
Retail sales were surprisingly strong in November, posting a 1.2 percent gain overall, following a 0.2 percent rise the prior month. Excluding motor vehicles, the increase was a robust 1.8 percent, after a 0.4 percent boost in October. Gasoline was the key factor in the gain as gasoline sales spiked 6.8 percent after a 3.1 percent rise in October. Nonetheless, sales excluding gasoline rose 0.6 percent in November, compared to a 0.1 percent decline in October. But large retailers have been reporting much softer sales over the holidays following the strong start after Thanksgiving. Retail sales outside of service station sales and electronics are likely give up a good portion of November's gains.
Retail sales Consensus Forecast for December 07: 0.0 percent
Range: -0.4 to +0.3 percent
Retail sales excluding motor vehicles Consensus Forecast for December 07: -0.1 percent
Range: -0.4 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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