What Is Retail Sales?

What is retail sales? It is the monthly measure of how much consumers spent at retailers and restaurants: shops, car dealers, petrol stations and online sellers.

In the US, the Census Bureau publishes it as the Advance Monthly Sales for Retail and Food Services, at 8:30 a.m. Eastern Time, around the middle of the following month. It is an early estimate from a sample of about 4,800 firms (Census Bureau). Every date is on the Census Bureau’s economic indicator calendar, and the forecast for each country’s report is on the Economic calendar.

Consumer spending is a large part of most developed economies. Retail sales is one of the first reads on it, long before the quarterly figure in What Is GDP (Gross Domestic Product)?

Three numbers, not one

• The headline: all retail and food services sales.
• Sales without motor vehicles and parts, whose big purchases swing from month to month. The report also gives the total without petrol stations, and without both.
• In the US, analysts also watch a narrower “control group”, used as a guide to the consumer spending that goes into GDP.

A strong headline with weak sales outside autos usually means a busy month at car dealers, not a broad pick-up in spending.

The previous month is revised in each new report. A result above the forecast that comes with a downward revision to the month before is weaker than it looks.

Money spent, not goods bought

The figures are adjusted for the season and for holidays, but not for price changes. They count money spent, not the volume of goods bought.

When prices rise quickly, a flat figure can mean people are buying less and paying more. Reading the report next to CPI shows whether spending grew after inflation.

How it moves a currency

Take a US report well above the forecast, with sales outside autos above it too. Consumers are spending freely, so demand keeps pressure on prices. The Fed then has less reason to cut rates, and the dollar tends to rise.

Change two details: flat sales outside autos and a sharp downward revision to the month before. The case is much weaker, and the dollar’s first move often fades.

One month is noisy: weather, holidays and price swings all distort it. A run of strong or weak reports changes a central bank’s view more than a single one. Why central banks also look past food and energy prices is in What Is Core Inflation?