Haver Analytics
Haver Analytics
Global| Jan 23 2007

Weekly Chain Store Sales Ticked Up, January Firmest Since 1999

Summary

The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales last week ticked 0.1% higher after no change the prior week. The seeming lethargy of these gains, however, belies the greater strength of [...]


The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales last week ticked 0.1% higher after no change the prior week. The seeming lethargy of these gains, however, belies the greater strength of spending. Due to firm gains at the end of December and at the beginning of this month, the average level of chain store sales in January is up 3.0% from the prior month, a rate of increase not seen since 1999. During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.

The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

The leading indicator of chain store sales from ICSC-UBS also showed strength and rose 0.3% after a 0.8% increase the prior week.

ICSC-UBS (SA, 1977=100) 1/20/07 1/13/06 Y/Y 2006 2005 2004
Total Weekly Chain Store Sales 480.9 480.2 4.8% 3.3% 3.6% 4.7%
Gasoline Prices Down Again
by Tom Moeller January 23, 2007

The rise in chain store sales owes something to the continuing decline in gasoline prices. Unleaded gasoline prices at the pump dropped six cents last week to an average $2.17 per gallon after the eight cent decline during the prior week. Further relief from higher retail gasoline prices may be signaled by declines in the spot market (NY harbor) price for a gallon of regular gasoline which is down thirty six cents from its peak in early December. Colder temperatures have given little lift to crude oil prices which yesterday settled at $51.14 (-24.6% y/y), down more than ten dollars from the December average of $62.03. The colder temps have, however, pushed natural gas prices higher to $7.17 per mmbtu, up nearly one third from the recent low.

The latest Short-Term Energy Outlook from the U.S. Energy Information Administration is available here.

Weekly Energy Prices 01/22/07 01/15/07 Y/Y 2006 2005 2004
US Retail Gasoline Price, Regular $2.17 $2.23 -7.3% $2.57 $2.27 $1.85
UK CBI Industrial Survey: Lower Exports and Price Rises Ahead 
by Louise Curley January 23, 2007

In the current survey, the British industrialists surveyed quarterly by the Confederation of Business Industries (CBI) were less pessimistic regarding the general business situation than they had been last October. They were, however, more pessimistic regarding export prospects for the next twelve months. This overall impression is due in part to the volume of new orders. The percent balance on the volume of total new orders over the past three month rose from -5% to 10% and expectations for the next 3 months are for an even higher balance of 15%. The respondents to the survey see more improvement in domestic orders than in export orders, both for the past three months and for the next three month as can be seen in the table below. Part of the reason for the dampening of export expectations is the strengthening of the pound against the dollar and the euro as can be seen in the first chart.

One of the most notable details of the current survey was the increase in the balance between those raising prices over the past three months and those lowering them. The percent balance was 15%, an increase of 12 percentage points from the 3% of the October survey and the highest since July, 1995. At the same time, the balance between those experiencing higher costs and those experiencing lower costs was 18%, down from 24% in the October survey.

As a result of these trends, the excess of costs over prices was the smallest recorded over the past 10 years as can be seen in the second chart. For the next three months, 19% more respondents expect prices to rise than to fall and 15% more expect costs to rise than to fall. This is the first time since the first quarter of 2004, that the percent balance of those expecting price increases in the three months ahead will exceed the percent balance of those expecting cost increases, as can be seen in the third chart.

These trends auger well for profits, but they raise concerns for inflation and the possibility of further interest rate rises. The December inflation rate of 3.0% prompted the unexpected rise in the Bank of England's core interest rate from 5.00% to 5.25% on January 11, 2007.

CBI INDUSTRIAL SURVEY (% Balances)  Q1 07 Q4 06 Q1 06 Q/Q dif Y/Y dif 2006 2005 2004
Optimism General Business Situation -7 -10 -14 3 7 -8 -19 7
Optimism Export Situation Next 12 mos -2 1 -5 -3 3 1 -6 7
Prices past 3 mos  15 3 -4 12 19 1 2 -4
Costs  past 3 mos 18 24 23 -6 -5 20 22 9
Prices  next 3 mos 19 12 12 7 7 10 3 3
Costs  next 3 mos 15 18 21 -3 -6 15 14 7
Total Orders  past 3 mos 10 -5 -8 15 18 -2 -11 9
Total Orders next 3 mos 15 3 -2 12 17 4 1 8
Export orders past 3 mos  2 -1 -5 3 7 -1 -7 1
Export orders next 3 mos 6 3 -2 3 8 4 -2 4
Domestic orders past 3 mos  7 -11 -15 18 22 -8 -15 5
Domestic orders next 3 mos  8 0 -9 8 17 1 -2 7
  • Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio.   Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984.   He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C.   In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists.   Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.

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