28/10/2011: Retail Sector Activity Index & Consumer Confidence: September

Retail sales data for September, released by CSO today allows us to update the series for consumer confidence and my own retail sector activity index which is a weighted average of Volume and Value of Sales and Consumer Confidence, normalized to 100=January 2005.

Here are the charts and some data trends:

The Retail Sales Activity Index has now broken through the previous moderation range and surprised to the downside with a sharper downturn in September 2011. Index reading currently stands at 97.1 or 2.9 percentage points below January 2005. Compared to Q2 2011, Q3 2011 reading is 3.4% down and mom the index is down 1.7%. Year on year, RSAI is down 1.9%. 

This is a new index, so some data 'bugs' can be expected, but the index weights are based on long-term multi-factor model relating activity in the sector as measured by Volume and Value of retail sales, linked to employment and consumer confidence.

For pre-crisis 2006-2007, RSAI averaged 125.3, while in the last 6 months the average was 99.6.

Speaking of consumer confidence, chart below shows that current readings for both Value and Volume of retail sales are still below their long-term equilibrium relationship consistent with consumer confidence. In other words, for as bad as the latest retail sales activity is, Consumer Confidence Index continues to provide relatively upbeat sentiment reflection.

 Consumer Confidence (ESRI) indicator is now at 53.3 for September 2011, down from 55.8 in August and the lowest reading since February 2011.

Consumer Confidence indicator for September was 4.5% below August reading, but 1.7% above September 2010 reading. 6mo average for CCI now stands at 56.4 against 2006-2007 average of 72.5. Q3 CCI was 5.3% below Q2 CCI.