Thursday, 14 February 2008

US Retail Sales Suprise...Or Do They?

The US stockmarket got excited over better than expected retail sales yesterday. From the Department of Commerce:
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $382.9 billion, an increase of 0.3 percent from the previous month and 3.9 percent above January 2007. Total sales for the November 2007 through January 2008 period were up 4.4 percent from the same period a year ago. The November to December 2007 percent change was unrevised from -0.4 percent.

Retail trade sales were up 0.4 percent from December 2007 and were 3.8 percent above last year. Gasoline station sales were up 23.0 percent from January 2007 and sales of nonstore retailers were up 10.6 percent from last year.

Excluding autos and gasoline, retail sales were flat. That was still better than expected due to a surprising 0.6% rise in auto sales. Surprising since car companies reported earlier this month that sales fell to just a 15.3 million annual rate. So either people are buying more expensive models or car prices have gone up. Either way probably not a sustainable trend.

Revisions - as can be seen below, November retail sales have now been revised twice, bringing it down a not insignificant -0.6% from the original estimate. Also December was revised down -0.3% from the original estimate.

Revisions are a normal part of the process, it is the direction as well as the size of the revisions that is of interest. November has been revised down twice, December was revised down in the latest report. What will revisions to January bring? Not a bad report by any means, but certainly not cause to get too optimistic about the US consumer.