July Retail Sales: Another Month of Disappointing Data

August 13, 2014

by Doug Short

The Advance Retail Sales Report released this morning shows that sales in July were flat month-over-month (up 0.04% to two decimal places), down from 0.2% in June. Core Retail Sales (ex Autos) rose 0.1% in July, down from 0.4% in June. This was the second month of disappointing data.

Today's headline and core numbers were well below the Investing.com forecasts, which were 0.2% for Headline and 0.4% 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 12 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.

Click to View

Click to View

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

Click to View
Click for a larger image

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

Click to View
Click for a larger image


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.

Click to View
Click for a larger image

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

Click to View
Click for a larger image


Real Retail Sales: A Preliminary Estimate

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 0.2%, which would put the YoY growth to an exceptionally weak 1.6%.

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

Website by the Boston Web Company