Retail Sales Have Been Growing—but not Fast Enough
Sizing Up the Consumer Sector during the Key FOMC Meeting
Retail sales
Retail sales are one of the most important indicators for the US economy, and they’ve been growing—but not at the fast rate the market wants. In November, retail and food service sales grew 0.2% while economists had expected an increase of 0.3% due to the ongoing holiday season. Let’s have a look at retail and food services sales in real terms.
As you can see from the above chart, retail and food services sales more or less flattened in calendar 2015. A considerable increase in the Fed’s interest rate would mean that, in 2016, retail sales would be under pressure and could even dip at the start of the year.
How important is retail sales growth?
Retail sales data are among the major economic indicators not only for the retail sector (XRT) (XLY) but also for the overall US economy. They’re reported by the Census Bureau and U.S. Department of Commerce. Retail sales are a leading indicator of the economy, so Wall Street keeps a close eye on this data. It paints a picture of retail goods sales over a period. A continuous drop in this metric can signal that the industry is slowing and that manufacturers’ inventories are rising substantially, which could affect other sectors. Falling retail sales are a negative signal for retailers like Macy’s (M), Walmart (WMT), and Nordstrom (JWN).
In the next article of this series, we’ll take a look at the how jobs have been rising and the effect on the market.
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