January Retail Sales Were Surprisingly Weak; No Help from Cheaper Gasoline

February 12, 2015

by Doug Short

The Advance Retail Sales Report released this morning shows that sales in January came in at -0.8% month-over-month, which comes on top of a -0.9% decline in December. Core Retail Sales (ex Autos) came in at -0.09%, which follows a -0.09% December decline (although that is an upward revision from the December Advance Estimate of -0.1%).

Today's numbers came in substantially below the Investing.com forecast of -0.05% for Headline Sales and 0.04% for Core Sales.

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.

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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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Did Savings on Gasoline "Fuel" Non-Gas Spending?

Given the sharp dcline in gasoline prices in recent months, we would expect Retail Sales ex Gasoline to look strong, with savings on gas prices increasing other purchases. But January sales ex-gas were flat at 0.0% MoM.

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Bottom Line: The Advance Retail Sales for January, both headline and core, were significantly below economists' expectations and a potential source of concern for Q1 economic growth.

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