"Consumers brushed off rising gasoline prices and slumping home sales to storm the malls in May"
This is completely bogus. There was no increased foot-traffic in May vs. April. The idiots in the MSM say things like "consumers are brushing off rising prices" without realizing it is the higher prices that are creating higher retail sales dollars (inflation). Unit volume is flat or down - just ask Walmart.
You are right to look at the underlying trend in sales. At the same time, the result was sufficiently different from what was anticipated that it puts a far different light on Q2 GDP growth prospects. Eyeballing wire service headlines reporting revisions to GDP forecasts after the retail sales data, it looks like the range of estimates is centered around 3%-4%. As of a week ago, the median estimate was 2.6% (Bloomberg survey).
Core sales, excluding the highly-price-volatile gasoline, vehicle and building materials components, showed a 0.8% rise. It is possible that leaving out the most price-volatile components was not enough to filter big price swings from the data in May, but on the face of it, a 0.8% rise in that core retail sales series looks like a real rise in demand. I would guess that a downward revision due to measurement error is more likely than finding out that there is rampant inflation in the non-gasoline/car/building material component of retail sales.
Until we see revisions (and the personal spending data for May), this looks like a reall spike in spending.
Okay maybe this will post in the right thread- curse halo again!
Retail grew by how much?
Fast Growing leader
Arizona's latest numbers:
"April sales tax revenues
continued to be sluggish. Retail
collections grew only 3.5%, and
contracting collections
decreased (0.9)% on a yearover-
year basis. This is the
second month in a row
contracting collections have
declined. The reduction in
contracting is tied to the level
of construction activity. On a
month-over-month basis,
construction employment
declined by 600 jobs in April. By
way of comparison, April-over-
March construction employment
has grown at an average
rate of 1,600."
When you start stripping out population growth, and realize that the contracting tax collections have been falling, the picture starts looking much worse. Further on in the same report, current income tax collections are reported as falling below trend-"Individual Income Tax collections were $603.7
million in April, or (2.8)% below last year." Um, income growth not reported here, sir. (The page cannot be found
I did notice in the fourth paragraph of Crutsinger's AP report (Expired? .v=19) an interesting sort of footnote:
"Sales would have been strong even without last month's big jump in gasoline prices, which saw prices top $3.20 per gallon. Excluding sales at gasoline stations, overall retail sales would still have been up 1.2 percent."
Um, 1.2 percent. Wow, detrend that for inflation in commodities pushing through and I bet you get near negative in real terms.
All in all, the data don't seem to justify Wall Street's good times are here response- but then Wall Street takes any excuse for a party;-}
Someday this war's gonna end...
but the stimulation seems to have run out.
March, April, May and June retail sales all are impacted by holiday shifts. The early Easter moved sales from April to March, and the early Memorial Day weekend shifted some sales from June to May. For this period, tracking two month moving averages is a much better strategy.
That having been said (or written), we may be seeing a marginal boost for consumer spending from debt payoff. If so, rising interest rates are likely to reverse that trend. The CPI-U is very understated.
I looked at the 5 month (YTD) YoY for retail sales and it doesn't look like an increase after inflation. To the extent that consumers are hitting the malls they seem to be paying for it by carefully controlling needs spending, which does not equate to a good year for most retailers. High-end retailers, of course, are having a banner year.
So while I wouldn't be surprised if these numbers are revised down. It does seem likely that retail sales did rebound in May. And, again, reports of the consumer's demise may have been greatly exaggerated.
Auto sales were up in May, despite claims otherwise.
Inventories for autos apparently rose. Good news, bad news.
So while I wouldn't be surprised if these numbers are revised down. It does seem likely that retail sales did rebound in May. And, again, reports of the consumer's demise may have been greatly exaggerated.
Looking at that graph and the month to month noise, I don't it's possible to determine anything from one data point.
The rise in interest rates makes me more pessimistic about future retail sales.
My tell on retail is WalMart, where Mr. & Mrs. Middle shop, and their monthly sales are at least 11% below where they should be, and it's been this way since the beginning of the year. Conclusion: I agree with CR, and wouldn't read too much into today's report.
CR,
It would probably be interesting to see in the same graph real retail sales growth, real MEW and real disposable income growth. That would probably show if reduced MEW is impacting consumption.
I don't see anywhere in that report where it says auto unit volume was up.
Mish does a pretty good job decontructing the retail numbers and he says auto unit volume is down and the retail "increases" are all import inflation, which makes perfect sense. As the real US economy slows, China is starting to overheat and the CCB is feeling the heat. The only solution for this is a higher yuan, and that's exactly what we're getting. The effect of this is much higher import prices. I fully expect this trend to increase dramatically in the coming months, especially in light of the Asian 27% tariff bill and bond yields blowing out.
Now obviously there will come a point where the increasing import prices get so high that even the relentless US consumer will take a pass, but we're not quite there yet. So in the interim we get phony retail increases that are nothing more than inflation gone haywire. And no, this wasn't a noticeable issue in April - it first started in May. I guess this is the downside to Greenscam's conundrum. LOL!
Look at the government publication of the data. Reading the base government table of data raises a question.
The question is -of what value is this "data" when almost every subcategory that is listed as up has a asterisk in the data column that means "(*) Advance estimates are not available for this kind of business."
Many of the subcategories are the main components of the categories.
Doesn't this mean that the headline increases are for the most part predictions of what the data might be and not actual records of what happened?
Is there a super-secret double-plus good method whereby the headline numbers are obtained? Or is there a dartboard? Or a hamster on a turntable?
I'd like to add one additional point relative to WalMart. Both March and May are stronger retail months than April for them, so May 'should be' up over April, which was already weak. If May had come in weak, I'd be shorting any and every retail stock out there.
Now, if June comes in weaker than May, WATCH OUT BELOW, because it means we've hit a turning point. The only month stronger for WalMart than June is December (Christmas).
Overall, energy-related products and some raw materials showed significant price increases but wage pressures dont seem to have increased, the Fed said.
I think this is absolutely key. You can't sustain inflation without wages keeping pace. If costs are rising it's going to have to come out of profits if producers can't charge more... unless consumers pick up the pace of their borrowing.
If China was one of our states instead of its own country we'd be very concerned about wage pressures. Wouldn't we? Someday they are going to spend that paper money we send them just like one of our states would. So how it is any better for us that they are their own country? If anything, I'd say it is worse. They compete with us long-term and they are starting to build up the same appetite for oil we have.
Useful and interesting. While Retail is volatile and I agree with the need to see the "uptick" over a longer time the YoY clearly shows a downtrend - in fact if we were to be so bold as to apply some of the technical chartists tools it certainly looks like a channel headed down. Or a volatile series around a non-linear curve in a downtrend. Take you picks.
BtW - the markets seem to have re-discovered interest rates. The retail news despite the headlines isn't really sufficient to explain the market. In fact a strong economy would mean sustained Fed rates with all the last 2-3 years fear that entails. It seems to me that the upward leap in longer rates explains a lot of the last week's plus gyrations.
For our purposes isn't it important to note that this is the first time in several years that l.t. rates are in fact re-tilting the yield curve ?
CR
You report "YoY real retail sales are up just over 2%" but Minyanville's Five Points says "retail sales are now running at a 5% pace year-over-year". Is this difference just real (inflation-adjusted) vs. nominal (non adjusted) or is there a disagreement about the stats?
"Consumers brushed off rising gasoline prices and slumping home sales to storm the malls in May"
This is completely bogus. There was no increased foot-traffic in May vs. April. The idiots in the MSM say things like "consumers are brushing off rising prices" without realizing it is the higher prices that are creating higher retail sales dollars (inflation). Unit volume is flat or down - just ask Walmart.
CR,
You are right to look at the underlying trend in sales. At the same time, the result was sufficiently different from what was anticipated that it puts a far different light on Q2 GDP growth prospects. Eyeballing wire service headlines reporting revisions to GDP forecasts after the retail sales data, it looks like the range of estimates is centered around 3%-4%. As of a week ago, the median estimate was 2.6% (Bloomberg survey).
But retailers themselves have not been reporting strong sales.
Where does Census get their numbers?
Darth,
Core sales, excluding the highly-price-volatile gasoline, vehicle and building materials components, showed a 0.8% rise. It is possible that leaving out the most price-volatile components was not enough to filter big price swings from the data in May, but on the face of it, a 0.8% rise in that core retail sales series looks like a real rise in demand. I would guess that a downward revision due to measurement error is more likely than finding out that there is rampant inflation in the non-gasoline/car/building material component of retail sales.
Until we see revisions (and the personal spending data for May), this looks like a reall spike in spending.
Okay maybe this will post in the right thread- curse halo again!
Retail grew by how much?
Fast Growing leader
Arizona's latest numbers:
"April sales tax revenues
continued to be sluggish. Retail
collections grew only 3.5%, and
contracting collections
decreased (0.9)% on a yearover-
year basis. This is the
second month in a row
contracting collections have
declined. The reduction in
contracting is tied to the level
of construction activity. On a
month-over-month basis,
construction employment
declined by 600 jobs in April. By
way of comparison, April-over-
March construction employment
has grown at an average
rate of 1,600."
When you start stripping out population growth, and realize that the contracting tax collections have been falling, the picture starts looking much worse. Further on in the same report, current income tax collections are reported as falling below trend-"Individual Income Tax collections were $603.7
million in April, or (2.8)% below last year." Um, income growth not reported here, sir. (The page cannot be found
I did notice in the fourth paragraph of Crutsinger's AP report (Expired? .v=19) an interesting sort of footnote:
"Sales would have been strong even without last month's big jump in gasoline prices, which saw prices top $3.20 per gallon. Excluding sales at gasoline stations, overall retail sales would still have been up 1.2 percent."
Um, 1.2 percent. Wow, detrend that for inflation in commodities pushing through and I bet you get near negative in real terms.
All in all, the data don't seem to justify Wall Street's good times are here response- but then Wall Street takes any excuse for a party;-}
Someday this war's gonna end...
but the stimulation seems to have run out.
March, April, May and June retail sales all are impacted by holiday shifts. The early Easter moved sales from April to March, and the early Memorial Day weekend shifted some sales from June to May. For this period, tracking two month moving averages is a much better strategy.
That having been said (or written), we may be seeing a marginal boost for consumer spending from debt payoff. If so, rising interest rates are likely to reverse that trend. The CPI-U is very understated.
I looked at the 5 month (YTD) YoY for retail sales and it doesn't look like an increase after inflation. To the extent that consumers are hitting the malls they seem to be paying for it by carefully controlling needs spending, which does not equate to a good year for most retailers. High-end retailers, of course, are having a banner year.
Thank goodness the sales were up last month. I was getting worried.
Now Wall Street has acted properly and appropriately today.
Onward and upward I say! Let the good times continue (or roll, depending on your preference).
A few thoughts...
1) Retail sales are often revised sharply. wouldn't exactly be stunned to see this number revised down some next month.
2) The numbers many are referring to (WalMart, Target, etc.) do not constitute the entirety of retail sales as reported by Census. Today's numbers also include grocery stores, restaurants, gas stations, etc. That's a lot of sales we didn't have information on. Also, the industry numbers that were reported by the ICSC weren't weak. April was weak. May's sales, according to them were perahps modest, but not even close to negative as some suggest. See: Supporting the governments data, the International Council of Shopping Centers-UBS Index announced last Thursday showed that retail sales rose 2.5% in May, versus a 1.9% decline in April. Those are YoY numbers, but still point to a rebound in May.
3) Auto sales were up in May, despite claims otherwise.
So while I wouldn't be surprised if these numbers are revised down. It does seem likely that retail sales did rebound in May. And, again, reports of the consumer's demise may have been greatly exaggerated.
Auto sales were up in May, despite claims otherwise.
Inventories for autos apparently rose. Good news, bad news.
So while I wouldn't be surprised if these numbers are revised down. It does seem likely that retail sales did rebound in May. And, again, reports of the consumer's demise may have been greatly exaggerated.
Looking at that graph and the month to month noise, I don't it's possible to determine anything from one data point.
The rise in interest rates makes me more pessimistic about future retail sales.
Oh, and as for Wall St., I don't think it was just retail sales. The beige book was more upbeat than previous releases.
My tell on retail is WalMart, where Mr. & Mrs. Middle shop, and their monthly sales are at least 11% below where they should be, and it's been this way since the beginning of the year. Conclusion: I agree with CR, and wouldn't read too much into today's report.
CR,
It would probably be interesting to see in the same graph real retail sales growth, real MEW and real disposable income growth. That would probably show if reduced MEW is impacting consumption.
Steve,
I don't see anywhere in that report where it says auto unit volume was up.
Mish does a pretty good job decontructing the retail numbers and he says auto unit volume is down and the retail "increases" are all import inflation, which makes perfect sense. As the real US economy slows, China is starting to overheat and the CCB is feeling the heat. The only solution for this is a higher yuan, and that's exactly what we're getting. The effect of this is much higher import prices. I fully expect this trend to increase dramatically in the coming months, especially in light of the Asian 27% tariff bill and bond yields blowing out.
Mish's Global Economic Trend Analysis: Retail Sales Conundrum
Now obviously there will come a point where the increasing import prices get so high that even the relentless US consumer will take a pass, but we're not quite there yet. So in the interim we get phony retail increases that are nothing more than inflation gone haywire. And no, this wasn't a noticeable issue in April - it first started in May. I guess this is the downside to Greenscam's conundrum. LOL!
Look at the government publication of the data. Reading the base government table of data raises a question.
The question is -of what value is this "data" when almost every subcategory that is listed as up has a asterisk in the data column that means "(*) Advance estimates are not available for this kind of business."
Many of the subcategories are the main components of the categories.
Doesn't this mean that the headline increases are for the most part predictions of what the data might be and not actual records of what happened?
Is there a super-secret double-plus good method whereby the headline numbers are obtained? Or is there a dartboard? Or a hamster on a turntable?
I'd like to add one additional point relative to WalMart. Both March and May are stronger retail months than April for them, so May 'should be' up over April, which was already weak. If May had come in weak, I'd be shorting any and every retail stock out there.
Now, if June comes in weaker than May, WATCH OUT BELOW, because it means we've hit a turning point. The only month stronger for WalMart than June is December (Christmas).
BTW, from today's Beige Book report:
Overall, energy-related products and some raw materials showed significant price increases but wage pressures dont seem to have increased, the Fed said.
I think this is absolutely key. You can't sustain inflation without wages keeping pace. If costs are rising it's going to have to come out of profits if producers can't charge more... unless consumers pick up the pace of their borrowing.
ac,
Wage pressures are rising, just not in the US. I think that is even more key.
How Rising Wages Are Changing The Game In China
A labor shortage has pay soaring. That is sure to send ripples around the globe.
If China was one of our states instead of its own country we'd be very concerned about wage pressures. Wouldn't we? Someday they are going to spend that paper money we send them just like one of our states would. So how it is any better for us that they are their own country? If anything, I'd say it is worse. They compete with us long-term and they are starting to build up the same appetite for oil we have.
Useful and interesting. While Retail is volatile and I agree with the need to see the "uptick" over a longer time the YoY clearly shows a downtrend - in fact if we were to be so bold as to apply some of the technical chartists tools it certainly looks like a channel headed down. Or a volatile series around a non-linear curve in a downtrend. Take you picks.
BtW - the markets seem to have re-discovered interest rates. The retail news despite the headlines isn't really sufficient to explain the market. In fact a strong economy would mean sustained Fed rates with all the last 2-3 years fear that entails. It seems to me that the upward leap in longer rates explains a lot of the last week's plus gyrations.
For our purposes isn't it important to note that this is the first time in several years that l.t. rates are in fact re-tilting the yield curve ?
CR
You report "YoY real retail sales are up just over 2%" but Minyanville's Five Points says "retail sales are now running at a 5% pace year-over-year". Is this difference just real (inflation-adjusted) vs. nominal (non adjusted) or is there a disagreement about the stats?