What are 'Retail Sales'
Retail sales are an aggregated measure of the sales of retail goods over a stated time period, typically based on a data sampling that is extrapolated to model an entire country. Measuring consumer demand for finished goods, retail sales help gauge the pulse of an economy and its projected path toward expansion or contraction. As a leading macroeconomic indicator, healthy retail sales figures typically elicit positive movements in equity markets.
BREAKING DOWN 'Retail Sales'In the United States, retail sales are a monthly economic indicator. The retail sales report, compiled and released by the Census Bureau and the Department of Commerce, covers the previous month, and is released about two weeks after the month-end. Comparisons are made against historical data; year-over-year comparisons are the most-reported metric because they account for the seasonality of consumer-based retail.
Behind the Retail Sales Report
The retail sales report captures in-store sales as well as catalog and other out-of-store sales. The report also breaks down sales figures into groups such as food and beverages, clothing and automobiles. The results are often presented two ways: with and without auto sales being counted, because their high sticker price can add extra volatility to the data.
Retail sales figures are vital to stock investors as a whole, and especially to those who directly invest in retail companies. they are also a big component of the total gross domestic product (GDP) in the United States, so any extended drop-offs in retail spending can trigger a recession by lowering tax receipts and forcing companies to reduce head counts.
As far as broad economic indicators go, the ail sales report is one of the timeliest, providing data that is only a few weeks old. Individual retail companies often give their own sales figures around the same time per month, and their stocks can be very volatile around this time as investors process the data.
Retail Sales and the U.S Economy
Known as a key leading economic indicator, retail sales reports reflect statistics culled from 5,000 retail outlets and food service entities. With consumer spending accounting for approximately two-thirds of GDP, retail sales are viewed as a major driver of the economic health of a nation.
May 2016 retail sales were about $455 billion. The figure represents a 0.5% increase from April 2016 and a 2.5% increase over May 2015 figures. The May 2016 results came in higher than economists’ forecasts of 0.3%. Subsequently, better-than-expected retail sales results have prompted an expectation that U.S GDP growth estimates may be raised from the 2.5% annual projection currently fostered by economists.
Online retail purchases grew 1.3% over April 2016. Largely based on the growing popularity of retailers such as Amazon.com, Inc., sales from the cyber-segment reflected a 12.2% increase over May 2015. By contrast, weakness in traditional department stores continued. Sales fell by 5.8% over May 2015 figures as companies such as Macy’s, Inc. continue to close locations in the wake of a declining number of shoppers.