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 4/14/08 For Mar 2008 | |||||||||||||||||||||||||
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Highlights
Retail sales in March surprised the markets on the upside but strength was mostly in the essentials, including higher priced gasoline. Retail sales rebounded a partial 0.2 percent in March, following a 0.4 percent fall in February. The headline sales number came in above the market forecast for no change. Excluding motor vehicles, retail sales ticked back up 0.1 percent after declining 0.1 percent the month before. The market had expected a 0.2 percent increase. When excluding both motor vehicles and gasoline, sales were flat, after losing 0.1 percent in February.
Overall strength was limited to essentials and a few other categories. Consumers did spend on the basics with gasoline store sales up 1.1 percent and food & beverage stores up 0.4 percent. Both of these and especially gasoline were likely lifted to a large degree by price increases. The only other notable gains were in nonstore retailers and sporting goods. The largest declines were in building materials, down 1.6 percent, and general merchandise, down 0.6 percent. Obviously, the housing recession is hurting building materials and now higher gasoline prices may be keeping consumers from shopping as much.
Overall retail sales on a year-on-year basis in March declined to up 2.0 percent from up 2.9 percent the previous month. Excluding motor vehicles, the year-on-year gain slipped to up 3.3 percent from up 4.5 percent in February. Excluding both motor vehicle and gasoline sales, the year-on-year rate decreased to up 1.3 percent from up 2.5 percent in February.
Strength in March was narrowly based and heavily due to higher prices. In real terms, sales were likely negative and will be pulling first quarter GDP down. The bottom line is that the consumer sector really did not rebound in March.
Retail sales unexpectedly dropped in February and indicate that the consumer sector is under a lot more stress than previously believed and no longer can keep the economy out of a downturn. Retail sales fell 0.6 percent in February, following a 0.4 percent gain the month before. Excluding motor vehicles, retail sales declined 0.2 percent after rebounding 0.5 percent in January. More recent data show U.S. made autos and light truck sales slipping in March while chain store sales have been anemic. Retail sales go into the calculation of durables and nondurables components of personal consumption in GDP and another drop in retail sales will likely push GDP growth for the first quarter to zero or below.
Retail sales Consensus Forecast for March 08: 0.0 percent
Range: -0.4 to +0.5 percent
Retail sales excluding motor vehicles Consensus Forecast for March 08: +0.2 percent
Range: -0.3 to +0.7 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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