September Retail Sales: +0.6 Percent, +0.5 Percent Ex-Autos, ‘Control Group’ and ‘Core’ Less Impressive
Predictions: After a -0.3 percent showing in August, predictions per Yahoo’s Economic Calendar are for a 0.6 percent to 0.7 percent increase.
Some preliminary indicators haven’t been so strong.
The report will be here at 8:30.
HERE IT IS: Before looking at the seasonalizing, this is probably as much as anyone could have hoped for:
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for September, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $459.8 billion, an increase of 0.6 percent (±0.5%) from the previous month, and 2.7 percent (±0.9%) above September 2015. Total sales for the July 2016 through September 2016 period were up 2.4 percent (±0.5%) from the same
period a year ago. The July 2016 to August 2016 percent change was revised from down 0.3 percent (±0.5%)* to down 0.2 percent (±0.2%)*.
Retail trade sales were up 0.6 (±0.5%) from August 2016, and up 2.2 percent (±0.7%) from last year. Nonstore retailers were up 10.6 percent (±1.6%) from September 2015, while Food services and drinking places were up 6.1 percent (±3.3%) from last year.
Well, there was a big dropoff in not seasonally adjusted sales from $471.4 billion in August to $445.4 billion in September. That’s typical. Last year’s virtually identical drop got seasonally adjusted to a tiny gain below 0.1 percent, but the seasonal results compared to declines in previous years is all over the map.
I don’t think the topline increase is a strong indicator of potential strength, though the press will certainly characterize it as such. Several more such months with similar results would be, but that seems like wishful thinking.
The large positive results in food service and drinking places run counter to what the national restaurant industry surveys are saying, but there may be an adverse selection problem at work (i.e., the establishments selecting or electing to respond are the ones who aren’t doing well, while feistier newcomers are out there taking business away from them).
UPDATE: Zero Hedge is very unimpressed —
Just as we detailed previously, headline retail sales data met expectations with a 0.6% rise MoM but the control group missed expectations with a mere 0.1% rise (vs 0.4% expectations). However, year-over-year, control group retail sales rose just 2.5% – the slowest gain since Nov 2015.
Historically, retail sales growth this slow has tended to lead to recession…
The “core retail sales” excludes autos and gasoline sales. That metric was up 0.3 percent. “Control group retail sales” also excludes building materials. My math shows that group up 0.2 percent in September.
UPDATE 2: Zero Hedge explains why the reported increase at “Food Service and Drinking Places” is suspect.