Wednesday, July 14, 2010

Retail Sales: Small Purchases Up. Large Purchases Down.

The WSJ details:

U.S. retail sales tumbled a second straight time in June, falling more than expected in a sign consumer spending is slowing and draining steam from an economy saddled with high joblessness. Sales decreased 0.5%, the Commerce Department said Wednesday. Economists surveyed by Dow Jones Newswires had forecast a 0.3% decline.

The report was mixed, with some merchants reporting increases and others recording decreases. Excluding auto and gas sales, retail sales rose 0.1%. The bigger-than-expected drop in the headline number followed an upwardly revised 1.1% drop in May. Originally, May sales were estimated falling 1.2%.

Retail sales is a pivotal indicator of consumer spending, which makes up much of economic activity in the U.S. The second decline in a row dealt a blow to an economy with an unemployment rate of 9.5%, and will increase concerns about the recovery.
Looking at the components of the release, we see an interesting bifurcation...

Down were:
  • Autos (data which was already available comparing the strength in June to May)
  • Gas (a function of the decline in the price of oil)
  • Furniture / building materials (crash in new home sales)
  • Sporting Goods (no clue)
Up were "smaller" consumer goods purchases:
  • Electronics (iPhone?)
  • Clothing
  • Health stores
  • Restaurants (a good sign?)

Source: Census