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Economy in Brief

Can't Tell a Retail Sales Report by Its Headline
by Robert Brusca  September 14, 2012

Retail sales seemed to surge in August even as July's gain was cut back to +0.6% from +0.8%. But reality is a bit grimmer. The retail sales gain ex motor vehicle sales stands up at 0.8% but then if you subtract gas station sales from that, the net gain drops to a skinny 0.1%, not much in terms of sales volume.

Deflated by the CPI, real core retail sales (sales excluding gas station sales and food & beverage purchases) rose by 0.3%. On balance retail sales are up over three months and are up yr/yr but the real 3-month gain for core sales is only at a 1% pace and over 12-months it's at 3.4%.

A diffusion calculation finds only 29% of the more detailed durables and non durables categories saw sales accelerate in August compared to 94% accelerating in July. But over six months 64% of the categories are accelerating. Despite the headline in August the sales were not so solid although three of four main durables groups saw month to month increases. Furniture and electronics took a set-back on a sharp drop in electronics sales as furniture sales rose. The drop in electronics may have something to do with the new Apple phone offering, as i-phone sales typically fall off in the period before a new product announcement.

Obviously this is not a strong report and the Fed did not become more aggressive ahead of a strong retail sales report. But retail sales are not fading either. Durables spending was up by 1% mo/mo in August and that is a good sign. Over three months they are up at a moderate 2.2% annual rate but they are still up by a strong 7.4% over 12-months. Excluding gas station sales nondurable sales were flat in August but are up at a 2.4% nominal pace over three-months and by 3.9% Yr/Yr.

Retail Sales Trends
Total Retail Mo/Mo Seasonally Adjusted Annual Rate
Aug-12 Jul-12 3Mo 6Mo Yr/Yr YrAgo:Y/Y
Retail&Food 0.9% 0.6% 3.1% 1.0% 4.7% 8.3%
Retail ex MV&Parts 0.8% 0.8% 2.9% 0.6% 3.4% 8.8%
Retail ex MV&Parts&Gas 0.1% 0.8% 1.9% 1.0% 3.6% 6.7%
Core 0.4% 0.7% 2.4% 1.3% 5.4% 6.6%
Real Core 0.3% 0.6% 1.0% -0.7% 3.4% 4.6%
Durables Retail Mo/Mo Seasonally Adjusted Annual Rate
Aug-12 Jul-12 3Mo 6Mo Yr/Yr YrAgo:Y/Y
Durables 1.0% 0.4% 2.2% 0.4% 7.4% 5.9%
Building Materials 1.0% 1.2% 0.1% -7.2% 1.4% 8.1%
Motor Vehicles & Parts 1.3% 0.1% 4.0% 3.1% 10.7% 6.2%
MV Dealers 1.7% -0.1% 5.2% 4.5% 12.3% 6.2%
Furniture, Electronics, etc -0.5% 0.9% -2.7% 0.0% 2.7% 1.6%
Nondurables Retail Mo/Mo Seasonally Adjusted Annual Rate
Aug-12 Jul-12 3Mo 6Mo Yr/Yr YrAgo:Y/Y
Nondurables 0.8% 0.7% 3.5% 1.3% 3.6% 9.3%
Nondurables ex Gas 0.0% 0.8% 2.4% 2.0% 3.9% 6.9%
Food Srvc & Drinking 0.5% 0.3% 2.1% 3.4% 6.7% 5.5%
Diffusion by Period 29.4% 94.1% 64.7% 11.8% 23.5% --
Period Comparison for Diff M/M M/M 3M/6M 6M/12M 12M/24M --
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