August Retail Sales Continue to Disappoint

The Census Bureau's Advance Retail Sales Report for August released this morning was once again disappointing. Headline sales came in at -0.3% month-over-month to one decimal, a 0.35 point decline at two decimal places from last month. The Investing.com consensus was for -0.1%. Core sales (ex Autos) came in at -0.1% MoM. The Investing.com consensus was for a 0.3% decrease.

Here is the introduction from today's report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for August, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $456.3 billion, a decrease of 0.3 percent (±0.5%)* from the previous month, and 1.9 percent (±0.7%) above August 2015. Total sales for the June 2016 through August 2016 period were up 2.4 percent (±0.5%) from the same period a year ago. The June 2016 to July 2016 percent change was revised from virtually unchanged (±0.5%)* to up 0.1 percent (±0.2%)*.

Retail trade sales were down 0.5 (±0.5%)* from July 2016, and up 1.4 percent (±0.7%) from last year. Nonstore retailers were up 10.9 percent (±1.4%)
from August 2015, while Health and Personal Care Stores were up 7.8 percent (±2.3%) from last year. [view full report]

The chart below is a log-scale snapshot of retail sales since the early 1990s. The two exponential regressions through the data help us to evaluate the long-term trend of this key economic indicator.

Retail Sales Trends

The year-over-year percent change provides another perspective on the historical trend. Here is the headline series.

Retail Sales YoY

Here is the year-over-year version of Core Retail Sales.

Core Retail Sales YoY


Retail Sales: "Control" Purchases

The next two charts illustrate retail sales "Control" purchases, which is an even more "Core" view of retail sales. This series excludes Motor Vehicles & Parts, Gasoline, Building Materials as well as Food Services & Drinking Places. The popular financial press typically ignores this series, but it a more consistent and reliable reading of the economy.

Control Sales Trends

Here is the same series year-over-year. Note that the current level is fractionally below the highlighted values at the start of the two recessions since the inception of this series in the early 1990s.

Control Sales YoY

For a better sense of the reduced volatility of the "Control" series, here is a YoY overlay with the headline retail sales.

Headline and Control YoY

Bottom Line: The August sales were another disappointment after a weak July and strong numbers in June. Tomorrow we'll take a close look at Real Retail Sales after the August Consumer Price Index is released.