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Retail Sales Report: An Overview on Reading It


Release Date: Monthly, on or around the 13th
Release Time: 8:30AM ET
(View latest release)

The first figures that most investors and economist are likely to see from the Retail Sales report is released are much like what you see below, which came out on May 13th, 2015:

The U.S. Census Bureau makes this information available in a release that it publishes at 8:30 AM ET. Many market participants like to see these monthly numbers stripped of autos or of autos and gasoline because these numbers can, at times, be extremely volatile. This volatility can sometimes mask the fundamental directions of the economy and its various sectors. The consensus numbers are often useful for participants who are observing the markets from the periphery; any sharp divergence from these numbers is likely to meet with equally sharp movements in the stock and bond markets.

These May 13, 2015 numbers obviously fell short of expectations. After some positive employment trends and other positive economic numbers earlier in the month, many felt confident that consumers would emerge from the winter doldrums and bolster that 70% of the economy that is comprised of consumer spending. The May 13th number was especially disappointing because many thought that the American consumer was enjoying some disposable income left over because of lower gasoline and energy prices. The conventional explanation in the media for these inert retail numbers was that the consumer was using their gasoline windfall to pay down debt or to save and invest. 

Interpretation
Otiose or negative retail numbers are often bullish for the bond market, although they were not so on this day, when the market arrived at the assumption that the Fed would postpone any tightening.

Strong retail sales numbers, like most indications of a robust economy, are often bullish for stocks. By the same token, they are frequently bearish for bonds. And especially sizzling retail numbers can often denote ground zero for the beginning of a strong inflationary trend and its accompanying interest rate hikes.

Retail Sales numbers are closely watched by almost all market participants, in part, because they follow the behavior of the all-powerful consumer. Also, this report is timely—the data is only about two weeks old. It is also very detailed and easy to understand; many investors like to scrutinize this report for investing ideas.

The U.S. Census Bureau News release for May 13 announced that advanced estimates of U.S. retail and food services sales for April, “adjusted for seasonal variation and holiday and trading day differences,” was $436.8 billion, virtually unchanged from March, and 0.9% above April, 2014. The total “Not Adjusted” number for this period was $434.4 billion. It is perhaps noteworthy that the seasonal adjustment here is slight. All in all, these are uninspiring figures.

The Census Bureau’s News release breaks down its data into monthly sales, “by Kind of Business.” This portion of the report is much valued by investorsbecause it frequently helps them to find burgeoning zones within the economy.  For instance, sales at “food services and drinking places” were up 8.5% from April 2014. Seasoned investors will suspect that much of the gasoline savings wound up at these establishments. Less cheerful readings show department store sales declining 2.2% in one month and electronics and appliance sales falling for the 7th straight month.

This current lull in consumer retail sales might seem a little ominous. However, according to the Department of Commerce, this number has grown steadily at an average rate of about 2.4% per year since April of 2012.

       

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