Recent Updates

  • US: Mfrs' Shipments Inventories & Orders, CoreLogic HPI (Jun)
  • Manufacturing PMIs: Ireland, ASEAN, Myanmar, Canada (Jul)
  • Slovakia: Residential Property Prices (Q2), Central Government Operations, Public Sector Finance (Jul)
  • Mexico: Advanced Auto Sales (Jul)
  • more updates...

Economy in Brief

US Retail Sales Make Strong Gains...
by Robert Brusca September 15, 2009

US retail sales rang up strong results in August. The cash for clunkers program aided auto sales to a greater extent that most economists had anticipated. Sales rose by 2.7% month-over-month boosted by vehicle sales which rose by 10.7% on the month. Most major categories of sales rose in the month; furniture and electronics was a minor exception dropping by 0.1% and building materials was a major exception falling by an outsized 1.2% on the month. Stripping out gasoline stations where sales rose 5.1% mostly on higher prices and removing motor vehicles as well left retail sales up by 0.6% on the month. That particular sub-group exhibits improving sequential growth rates as well.

Year-over-year sales declines are still severe and that is a legacy of the severity of the recession and its impact on the consumer. Over 7miln jobs have been lost in the business cycle and that is a huge loss of income and of spending power for those consumers. But while the Yr/Yr drops are severe there are also some distortions. Nondurable goods sales excluding gas stations are down by only 0.9% Yr./Yr. Durables spending is down by 5.8% Yr/Yr on large declines in building materials and in furniture. The boost to vehicle sales this month leaves them lower Yr/Yr by just 1%.

The messages from this report are that the consumer sector has been hit hard by recession. Cash for clunkers has boosted auto’s up form weakness overall and has given those sales a huge boost in the month- a boost that is likely not sustainable – that’s the bad news looking ahead. Still, the August results leave sales in the new quarter (Q3) expanding at an annual rate of 9.5%. Extracting the vehicle component that growth rate comes down to 2.7%. Ex food and energy sales are up at a pace of 8.5% in Q3 and estimating the inflation impact leaves real core sales up at a pace of nearly 7% at an annual rate in Q3 compared to Q2. This is the compounded growth rate for Q3, two months into the quarter. But a drop off in auto sales is likely to trim this impact of quarterly consumer spending on retail sales by the time the quarter’s final numbers are in.

While it is good news for August and it the best news may be that sales have spread beyond autos, and have done so without a government help plan. The real question is how far will auto sales fall when the cash for clunkers program ends? There will be a spillover of some sales into September but Q4 will have to do what it can without any boost from this special program. All that raises some questions about the future, despite some nice improving fundamentals for the economy. The downside of government support programs is that those programs one day end… a second downside factor is that somebody has to pay for them.

Retail Sales Trends
  Mo/Mo Seasonally Adjusted Annual Rate
Retail Aggregates 2009.Aug 3-Mo 6Mo Yr/Yr YrAgo:Y/Y
Retail & Food Service 2.7% 14.3% 4.7% -5.3% 0.8%
Retail Excl MV&Parts 1.1% 5.1% 0.1% -6.2% 4.7%
Retail Excl MV&Parts&Gas 0.6% 1.0% -2.3% -2.9% 2.5%
Durables 2009.Aug 3-Mo 6Mo Yr/Yr YrAgo:Y/Y
Totals 5.9% 32.1% 10.8% -5.8% -10.1%
Building Materials -1.2% -13.6% -9.5% -13.6% -2.0%
Motor Vehicles & Parts 10.6% 70.3% 29.5% -1.0% -14.4%
  MV Dealers 11.9% 83.3% 35.0% -0.8% -15.9%
Furniture,electonics,etc -0.2% -4.5% -15.9% -11.6% -5.0%
NonDurables 2009.Aug 3-Mo 6Mo Yr/Yr YrAgo:Y/Y
Totals 1.4% 7.8% 2.3% -5.1% 6.2%
Food&Bev 0.5% 0.9% 1.9% -1.1% 6.8%
Health 0.4% 1.3% 2.3% 2.9% 3.2%
Gasoline 5.1% 47.4% 24.5% -26.7% 20.6%
Clothing 2.4% 1.2% -4.8% -5.1% 0.6%
SportGoods 2.3% 12.8% 0.4% -0.4% 0.6%
GenlMerch 1.6% 5.0% -1.9% -0.7% 3.7%
NonStore Retailers 0.1% 9.7% 2.5% -2.6% 4.0%
Misc Retail 0.2% 1.3% 2.3% 2.9% 3.2%
NonDurables EXCL Gas 0.8% 3.2% -0.4% -0.9% 3.8%
Food Service & Drinking 0.3% -0.5% -1.7% 0.7% 3.7%
large image