Key indicators that will drive consumer spending this week

Market Realist

Watch for these key indicators ahead of the July 4th weekend (Part 6 of 8)

(Continued from Part 5)

Motor vehicle sales

The motor vehicle sales statistics are released monthly by auto manufacturers and Autodata Corporation. Unit sales of motor vehicles include domestic sales and foreign-made vehicle sales, also called “imports.” Motor vehicle sales are good indicators of trends in consumer spending. Often, investors consider them a leading indicator at business cycle turning points.

Sales of total light motor vehicles in May were very good. Unit vehicle sales rose 4.6% to a 16.8 million annual rate. The June update is due on Tuesday, July 1, with consensus estimates at 16.4 million units.

ICSC-Goldman Store Sales

Consumer spending accounts for more than two-thirds of the economy. The ICSC-Goldman index is one of the timelier indicators of consumer spending, since it’s reported every week. It gets extra attention around the holiday season, when retailers make most of their profits. This weekly measure of comparable-store sales at major retail chains is published by the International Council of Shopping Centers and Goldman Sachs (GS). It relates to the general merchandise portion of retail sales. It accounts for roughly 10% of total retail sales.

The ICSC-Goldman same-store weekly sales tally recovered at 2.0% in the week of June 24, compared to the 0.4% reading in the previous week. The year-over-year rate also rose, recording 4.1% compared to the 3.1% recorded the prior week. Tuesday, July 1, will see the release of the tally for the current week.

Redbook

Redbook is a weekly measure of comparable-store sales at chain stores, discounters, and department stores. It’s conducted and released by Redbook Research, Inc. This index correlates with the general merchandise portion of retail sales, covering about 10% of total retail sales.

Redbook’s year-over-year same-store comparison fell from 3.5% to 3.3% in the week of June 24 reading. The week ahead will bring the July 1 reading.

The pattern in consumer spending is often the foremost influence on stock and bond markets. The Consumer Discretionary Select Sector SPDR Fund (XLY), which includes companies like McDonald’s Corporation (MCD) and Nike, Inc. (NKE) in its portfolio, and the SPDR S&P Retail ETF (XRT), are popular ETFs in the consumer discretionary equities ETFs category. Changes in consumer spending reflect in the performance of these ETFs.

Bloomberg Consumer Comfort Index

The Bloomberg Consumer Comfort Index is a weekly sentiment index that covers three critical variables:

  1. Respondents’ perception of the state of the economy
  2. Respondents’ evaluation of their personal finances
  3. Whether it’s a good time to purchase goods and services

While this isn’t directly a consumer spending indicator, it helps you gauge how spending could behave in the near future. To understand this index’s recent trends, please read Why consumer comfort keeps sticking around yearly highs .

Read on to the next part of this series to learn about another consumer confidence indicator, the Gallup U.S. ECI.

Continue to Part 7

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