Retail sales are an important economic metric. It tracks consumer demand for finished goods. The retail sales figure is reported every month by the U.S. Census Bureau, and serves as an indication to the direction of the economy. As Kavan Choksi UAE mentions, retail sales act as a key economic barometer and help determine whether inflationary pressures exist or not. Retail sales are typically measured by durable and non-durable goods purchased over a specific period of time.
Kavan Choksi UAE talks about sales as an economic indicator in the United States
Retail sales can be quite an effective indicator of the pulse of the economy, along with its projected path toward expansion or contraction. Figures of retail sales tend to be reported by all food service and retail stores and compiled by the U.S. Census Bureau. The measurement is ideally based on data sampling and is used to model the patterns for the whole nation.
Retail sales are a key macroeconomic indicator. Hence, healthy retail sales figures usually elicit positive movements in equity markets. Higher sales generally come as good news for shareholders of retail companies as it serves as an indication of higher earnings for them. On the other hand, bondholders are generally ambivalent towards this metric. Booming economy is good for everyone. However, lower retail sales figures and a contracting economy may eventually lead to a decrease in inflation. This may cause investors to get attracted towards bonds, and cause bond prices to rise eventually.
In addition to in-store sales, retail sales tend to capture catalog and other out-of-store sales of both durable and non-durable goods. These goods are broken down into several categories, including:
- Furniture Stores
- Gasoline stations
- New car dealers
- Food and beverage stores
- Pharmacies and drug stores
- Electronics and appliance stores
- Clothing and clothing accessories stores
As Kavan Choksi UAE mentions, as a broad economic indicator, retail sales reports are considered to be among the timeliest reports, as it offers data that is just a few weeks old. Individual retail firms commonly offer their own sales figures at the same time each month. Their stocks may additionally experience volatility as investors process the data.
Significant changes in price may have an impact on the figures of retail sales. Such fluctuation in prices is largely observed in two retail sales categories, which are food retailers and gas stations. Any significant increases in energy and food prices may cause sales figures to drop in both categories. As a result, it would impact the sales of a particular month.
Accurately measuring retail sales is crucial for assessing the economic health of the U.S., as consumer spending, or Personal Consumption Expenditure (PCE), makes up two-thirds of the gross domestic product (GDP). Retail sales data is released monthly in the United States, with information gathered by the U.S. Census Bureau through its Monthly Retail Trade Survey. The report is typically published mid-month, and it details the total sales for the previous month and the percentage change from the previous report. It also includes the year-over-year change in sales to account for seasonal variations in consumer retail activity.