Wednesday, June 13, 2012

A Closer Look Retail Sales

Above is a chart from the latest retail sales report.  Increases are in black, decreases are in red.  There are a few points that jump out.

1.) Building materials and supplies have decreased two months in a row, and sharply.  However, these only account for a little over 6% of the total adjusted retail sales figure.

2.) Gas sales dropped in both months.  Remember that his data series is not adjusted for price, so this number reflects a drop in gas prices.  Gas accounts for a little under 11.5% of the adjusted data series.

3.) Auto sales are still positive, up in both months and last monthly up strongly.  These account for about 18% of the total data series.

4.) Furniture and home store sales are also up the last two months, which account for about 2% of the adjusted series.

5.) General merchandise sales have decreased for tow months.  This accounts for about 13% of total sales.  Something I forgot to add in the original.  With gasoline prices dropping, you'd expect to see an increase in GM sales.

We see strength in two durable goods areas: autos and furniture sales, which is good.

But there is a concerning weakness in general merchandise sales.

The drop in gas prices is about the droop in prices as much as it is a drop in demand. 

The next 2-3 months of data are now very important in this series.  We need more data to determine if the gas story is the real story, or whether the general merchandise story continues.  We really need to keep an eye on auto sales; a drop there would be very damaging.

For now retail sales are flashing yellow.