Question: What Are U.S. Retail Sales?
Answer: U.S. retail sales measure the demand for goods and services sold as an end product to consumers or businesses. It doesn't include wholesale sales used to create other goods or services. Retail sales data predicts economic growth trends because consumer spending is 70% of total U.S. economic output.
Exactly What's Measured in Retail Sales?U.S. retail sales data are reported monthly by the Census Bureau. It reports on sales for both the most recent month and the last 12 months. The Bureau surveys 5,000 firms each month. The Bureau summarizes the report into 13 retail categories, including:
- Non-store retailers, which is essentially Internet retail sales.
- Auto dealers.
- Clothing stores.
- Electronics and appliance stores.
- Department stores.
- Food and beverage stores. This includes grocery stores.
- Building and garden supply stores.
- Sporting goods/hobby stores.
- Health/beauty stores.
- Furniture stores.
- Gas stations. (Source: Census Bureau, How Surveys Are Collected)
The most important thing to remember when reviewing the retail sales report is that the Census Bureau doesn't adjust for inflation. Therefore, volatile gas and oil prices can make it seem like retail sales are skyrocketing (usually in the spring, when gas prices rise) or dropping like a stone (usually in the late summer or fall, when gas prices drop).
Components of Retail Sales
The largest category of retail sales (20%) is auto and auto parts stores. Department and discount stores comprise 13%, while grocery stores are slightly less. Gas stations and restaurants are slightly less than 10% each. Apparel stores and drugstores come in at 5% each. Furniture stores and consumer electronics are around 2.5% each.
The most critical time of the year in retail sales is the holiday shopping season, which starts the day after Thanksgiving. Nearly 20% of retail sales occur from Black Friday through Christmas.
Can Retail Sales Data Help Predict Economic Growth?
Since retail sales are reported monthly, you can use them (somewhat) to predict economic growth. That's because U.S. Gross Domestic Product (GDP) is reported only quarterly. However, keep in mind that the retail sales report doesn't adjust for inflation, while GDP does. Also, 20% of annual retail sales occur during the holiday season. However, if you look at the comparison below, you'll see it doesn't do a great job. Nevertheless, it will give you a sense if you also look at business orders for durable goods and other economic indicators.
Current U.S. Retail Sales Data
June sales worsened, rising a scant .2%, less than the .5% gain in May. Part of this was seasonal, as sales were 4.3% higher than in June 2013, slightly off from May's 4.6% year-over-year gain.
Building materials and garden equipment were the worst hit, with a 1.0% drop. Restaurants and hotels were down .3%, auto dealers lost .2%, and furniture stores fell .1%. What drove growth? Online and drug stores, each up .9%. Clothing stores saw a .8% rebound from May's loss.
June is the last month in the second quarter. These weak sales means that GDP growth may continue to be weak.
Here's monthly retail sales estimates for each previous month since 2012, along with what drove growth.
- January - Sales were down .4%, and not because of the weather
- February - Online shoppers helped push sales up .3%.
- March - Sales rose a welcome 1.5%, boosted by automobiles.
- April - Sales only rose .5%, weighed down by a 2.3% decline in electronics. Even online sales fell .9%. This indicates that first quarter decline in GDP may not have been just weather-related.
- May - Sales were only up .5%. Department stores were the worst hit, falling 1.1%. Electronics stores fell .6%, while clothing stores and hobby stores were each down .5%. The biggest drivers of growth were online, up .6%, auto dealers, up 1.0%, and drug stores, up .1.1%. This is further proof of weak demand that wasn't related to harsh winter storms.
- January - Sales were up .1%. The biggest contributor ($70.9 billion) continues to be auto sales, a 9.4% increase. Another strong contributor ($39 billion) is online sales, up 15.7% from January 2012. Auto sales benefited from record-low interest rates, as did furniture stores, which 3.2% over last year. However, this only contributed $8 billion to total U.S. retail sales.
February - Sales rose to $421.4 billion, a 1.1% increase. Auto sales contributed $71.5 billion, thanks to record-low interest rates. Valentine's Day spending boosted the total by $18.6 billion. This strong growth in retail sales means that consumers are not letting the end of the payroll tax holiday affect their shopping. The holiday was part of Obama's 2010 tax cut, and it was allowed to expire as part of the 2013 fiscal cliff negotiations. Gas station sales, at $47.6 billion, were boosted by high gas prices.
- March - Cold weather and lower gas prices forced sales down .3%. The weakness was led by an expected 2.2% drop in gasoline station store sales. However, many other categories also declined, including electronic and appliance stores (-1.6%), department stores (-1.1%) and auto dealers (-.5%). No retail category gained 1% or more. The strongest was furniture (+.9%), miscellaneous retailers (+.8%) and restaurants (+.7%).
- April - Sales rose .2% thanks to increases in spring-inspired categories. Boosts in clothing (up 1.2%), gardening (up 1.5%) and sporting goods (up .5%) offset a 4.7% decline in gas station sales (a result of a seasonal drop in gas prices).Strength in retail sales drove confidence among investors, who had been concerned by softness in the March retail report.
- May - Up .5%, to thanks again to auto sales.
- June - Up .4%, to $422.8 billion, thanks to auto sales. This worried investors, who expected more robust growth. They were concerned that automotive could decline as interest rates move up. They'd like to see more broad-based demand for a wider variety of everyday items. The so-called core retail sales, which excludes the volatile categories of autos, gas and building supplies, rose just 0.15%. As a result, many analysts predicted that slower retail sales meant consumer spending is falling, throwing the recovery off track. Many analysts, such as Goldman Sachs, have revised their estimates down accordingly. However, year-over-year sales were up a robust 4.6%. This is important, because comparing retail to the same time last year removes the effect of seasonal variation.
- July - Sales rose just .2%, to $425.4 billion, although core retail sales rose .5%. This made investors happy about the July report. Why? Core retail sales excludes the volatile categories of autos, gas and building supplies, saw its largest gain in seven months, compared to just a 0.15% increase in June. The core retail sales is seen as a more accurate predictor of consumers' confidence and future shopping habits. This is especially important heading into the all-important holiday shopping season.
- August - Sales rose to $426.6 billion, thanks to financed purchases, not back-to-school.
- September - Sales dropped .1%, thanks to low auto sales over the Labor Day Weekend. The Retail Report was delayed due to the government shutdown.
- October - Big ticket items drove a .4% increase.
- November - Auto and building materials pushed sales to .7%. It's good that the 15-day government shutdown didn't seem to affect sales as much as it could have. However, it still might. It's left a lingering sense of uncertainty among shoppers. Forecasts for Black Friday/holiday shopping seasons are just 3.9%, and usually come in lower than predicted.
- December - Sales up .2% for the month. Worse, it was only up 3.1% for the holiday season (October - December) when compared to last year.
Estimated retail sales were $4.9 trillion, 5.03% better than 2011, helping to drive economic growth up a healthy 2.2%.(Source: My own calculations from U.S. Census raw data. (Retail Sales Spreadsheet).
Q1: Retail sales were up 1.6% (to $1.075 trillion) and GDP grew 2%.
- January - Sales only grew .1%, as consumers paid their holiday bills.
- February - Sales rose 1.3%.
- March retail sales were a new record, at $406.2 billion. This was 7.2% above the previous high set before the recession. That was $378.9 billion, set in December 2007. Compared to February, sales were up .7%. (Source: Census Department, Estimated Quarterly U.S. Retail Sales, and Monthly Retail Sales; Current GDP Statistics)
Q2: Retail sales gained just .1% (to $1.08 trillion), while GDP grew 1.3%.
- June - Sales fell .9%.
- May - Sales were .2% lower than in April, but that's because of lower gasoline prices. Gas station sales were 2.2% lower, as consumers spent $1 billion less at the pump. If this were taken out of the statistics, sales would have actually gone up .1%.
- April's sales .3% lower than in March, again because of declining gas prices.
Q3: Retail sales rose 1.3% (to $1.09 trillion) helping drive GDP up 3.1%.
- July - Sales rose .7%. The biggest increases were in summer-friendly sectors, such as sporting goods (up 1.6%), building supply (up 1%), and drug stores (up 1.1%). Online retail continued its long-term upward trend, rising 1.5%, while furniture stores rose 1.1% during the month. The was the first time since July 2005 that all components of retail sales rose in the same month. However, some of the gain was because the Commerce Department revised June's estimates further downward.
- August - High gas prices drove retail sales up 1.2%.
- September - Sales jumped a robust 1.1%.
Q4: The holiday drove retail sales up 1.4% ($1.105 trillion), but GDP only grew .4%.
- October - Sales were absolutely flat, but not because of Hurricane Sandy, even though the storm hit the East Coast October 29. That's because the data in the Commerce Department's survey had already been collected before Sandy hit.
- November - Retail sales rose .4%, totaling $412.4 billion. The impact of Hurricane Sandy was mixed, according to businesses surveyed. Some saw a drop-off, due to damage or inability of customers or workers to get to the stores. On the other hand, others saw an increase, as people shopped ahead for provisions or evacuees brought necessities in their new locations. All in all, it appears the negative impact was balanced by the positive impact in retail sales only. Of course, in human suffering, the negative impact was horrendous.
- December - The all-important holiday sales season was just .3% higher than November, but 4.7% higher than the previous year.