Interpreting the retail sales number

The retail sales number reported today came in mixed. The headline number came in below expectations, but the ex-auto number was strong. There were revisions everywhere.

What to make of this?

I believe that the American consumer it's would be a mistake to think that the American consumer as down and out. The Consumer Metrics Institute produces a series of figures that tracks American consumer activity on a daily basis. The daily series shows a modest uptick.

Daily numbers are inherently noisy, but the monthly figures show a definite rebound in consumer demand.

For the final word, Nomura (via Business Insider) interpreted the retail sales report positively:

The control measure feeds into estimates for the consumer spending component of GDP and suggests a healthy round of spending to start the year. Lastly, our preferred measure of consumer comfort, the category of dining out, increased by a strong 0.6% in January. Dining out can be seen as one of the ultra-discretionary categories of spending that is typically the first place households will cut back on spending if confidence is faltering.

Remember that we are in a central bank induced liquidity rally. Last week the BoE joined the party, this week it was the BoJ. Enjoy.


Cam Hui is a portfolio manager at Qwest Investment Fund Management Ltd. ("Qwest"). This article is prepared by Mr. Hui as an outside business activity. As such, Qwest does not review or approve materials presented herein. The opinions and any recommendations expressed in this blog are those of the author and do not reflect the opinions or recommendations of Qwest.

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