June Retail Sales Disappoint, Weak Autos Sales to Blame

July 15, 2014

by Doug Short

The Advance Retail Sales Report released this morning shows that sales in June rose 0.2% month-over-month, down from 0.5% in May, which was an upward revision from 0.3%. Core Retail Sales (ex Autos) rose 0.4% in June, the same as May, which was an upward revision from 0.1%. The major culprit in today's disappointing numbers was the -0.3% for the Motor Vehicle & Parts Dealers category, with new vehicle sales posting a -0.24%.

Today's headline and core numbers were below the Investing.com forecasts, which were 0.6% for Headline and 0.5% for Core.

The two charts below are log-scale snapshots of retail sales since the early 1990s. Both include an inset to show the trend over the past several months. The one on the left illustrates the "Headline" number. On the right is the "Core" version, which excludes motor vehicles and parts (commonly referred to as "ex autos"). Click on either thumbnail for a larger version.

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The year-over-year percent change provides a better idea of trends. Here is the headline series.

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

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Retail Sales: "Control" Purchases

The next chart illustrates 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. I've highlighted the values at the start of the two recessions since the inception of this series in the early 1990s.

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

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After the Consumer Price Index for June is released next Tuesday, we'll take a more detailed look at retail sales adjusted both for inflation and population growth. A preliminary estimate of real sales, based on an extraplolation for the seasonally adjusted CPI, is a month-over-month decline of 0.1%.

Bottom Line: The Advance Retail Sales for May, both headline and core, were weaker than expected. However, the Advance numbers are subject to substantial revisions, as I've illustrated here.

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