Friday, February 15, 2008

Retail Sales Headline Somewhat Misleading

Excerpt taken verbatim from the RGE Monitor:

U.S. Retail Sales: Strong or Worrisome?

The headline strength – up 0.3% m/m – in the latest U.S. retail sales numbers (January) surprised on the upside, but was it really all good news? Auto sales were up a solid 0.6%, which is at the least very hard to square with the latest data reported by the car makers and the Commerce department which showed a 7% fall in U.S. auto sales between December and January. Even excluding autos, U.S. retail sales were up 0.3% m/m on the wake of strong gasoline sales – that were up 2% m/m – explained by the increase in prices. Note that retail sales numbers are reported in nominal terms. If we take a deeper look at the core numbers – excluding gasoline, food and autos – nominal retail sales were actually flat, meaning they were negative in real terms. And other data on retail sales – such as the weekly reports from Redbook Research, ICSC/UBS securities as well as monthly reports from major retail chains and department stores – suggest softness in discretionary spending in January continuing into February.