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Headline Retail Sales Continues To Improve In August 2019


Retail sales continues its improvement trend which began earlier this year.

Even after adjusting for inflation, retail sales growth rate is better than GDP growth rate.

There is no indication using retail sales that there is an impending recession.

Retail sales improved according to US Census headline data. The three-month rolling average improved.

There was an upward adjustment of last month's data. The real test of strength is the rolling averages which improved. This should be considered another strong report.

Please consider that this data is not adjusted for inflation. There is no growth in employment in this sector.

Econintersect Analysis:

  • the unadjusted sales rate of growth decelerated 0.7 % month-over-month, and up 4.2 % year-over-year.
  • unadjusted sales 3-month rolling year-over-year average growth accelerated 0.3 % month-over-month, up 3.6 % year-over-year.

  • unadjusted sales (but inflation-adjusted) up 3.2 % year-over-year
  • this is an advance report. Please see caveats section below which shows variations between the advance report and the "final".
  • in the seasonally adjusted data - the strengths were motor vehicles, building materials, non-store retailers and sporting goods stores.

U.S. Census Headline Analysis:

  • seasonally adjusted sales up 0.4 % month-over-month, up 4.1 % year-over-year (published up 3.4 % YoY last month).
  • the market was expecting (from Econoday):
seasonally adjusted Consensus Range Consensus Actual
Retail Sales - M/M change +0.1 % to 0.4 % +0.3 % +0.4 %
Retail Sales less autos - M/M change +0.0 % to 0.4 % +0.2 % +0.0 %
Less Autos & Gas - M/M Change 0.2 % to 0.6 % +0.4 % +0.1 %
Control Group - M/M change 0.3 % to 0.6 % +0.5 % +0.3 %

Year-over-Year Change - Unadjusted Retail Sales (blue line) and Inflation-Adjusted Retail Sales (red line)

Retail sales per capita growth trend is mixed depending on periods selected - see graph below.

Year-over-Year Percent Change - Per Capita Seasonally Adjusted Retail Sales

From the U.S. Census Bureau press release:

Advance estimates of U.S. retail and food services sales for August 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $526.1 billion, an increase of 0.4 percent (±0.5 percent)* from the previous month, and 4.1 percent (±0.7 percent) above August 2018. Total sales for the June 2019 through August 2019 period were up 3.7 percent (±0.5 percent) from the same period a year ago. The June 2019 to July 2019 percent change was revised from up 0.7 percent (±0.5 percent) to up 0.8 percent (±0.1 percent). Retail trade sales were up 0.6 percent (±0.5 percent) from June 2019, and 4.6 percent (±0.7 percent) above last year. Nonstore retailers were up 16.0 percent (±1.4 percent) from August 2018, and motor vehicles and parts dealers were up 6.8 percent (±1.9 percent) from last year.

Seasonally Adjusted Retail Sales - All (red line), All except food services (blue line), and All except motor vehicles (green line)

The differences between the headlines and Econintersect are due to different approaches to seasonal adjustment (see caveats at the end of this post).

Comparison of the Year-over-Year Census Seasonally Adjusted Retail Sales (blue line) and Econintersect's Unadjusted Retail Sales (red line)

Declines of short duration often occur in the seasonally adjusted series without a recession resulting.

Retail and Food Services Sales - Seasonally Adjusted

And finally, as retail sales can be a component of determining a recession start date, the zero-line of the graph below could be an indicator a recession was underway (or about to begin).

Retail Sales - Recession Watch Graph

Please visit our landing page for a summary of all of our analysis this past week.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.