Thursday, December 22, 2011

22/12/2011: Retail Sales for November

Ok, folks, RTE is shouting "Biggest Retail Sales Rise Since March" (see link here) but you do know to turn to this blog to see the real numbers. So here are the updated charts and historical trends and some analysis.

It is worth noting that my Retail Sector Activity Index for October has predicted this uplift:
"A large jump in consumer confidence in October (to 63.7 from September reading of 53.3) is the core driver of improvement in the  overall Index od Retail Sector Activity, which now stands at 102.2 - above the expansion level of 100. This means that we can expect a small uplift in retail sector activity in months ahead, but this uplift can manifest itself through improved volumes of sales (value static, so margins declining) or improved value of sales (inflation) or both (more demand-driven uplift)."
Please note that below analysis exactly confirms the above predictions.

However, this does not mean that I share with the RTE headline excitement about the actual sales indices performance in November 2011. Here's why:

First of all - general retail sales (including motors), seasonally adjusted:

  • Value of retail sales rose from 87.2 in October to 88.2 in November, an increase of 1.1% mom, a drop of 0.68% yoy. History in making? Well, not really - in 2 months of October and November, retail sales rose 1.50%, in 2 months of May-June retail sales value grew 1.25% (statistically indifferent from 1.5% gain in last two months), and in 2 months between February and March they rose 1.26%, which is again identical - statistically-speaking - to the rise in last 2 months. So history is not being made here.
  • Significantly, annual rate of declines has slowed down in November to -0.7%, which is the best reading since June when there was zero change in retail sales year on year, but then, again, in January value of sales was up 4.3% yoy and then in February it was down just -0.2% yoy. Now, again, no historical headlines here.
  • Let's take a look at the trends. At 88.2 current reading is ahead of 3mo MA of 87.4 and 6mo MA of 87.7, but it is below 201 average of 88.86. In other words, current sales are worse than monthly average for 2010. And current sales are slightly ahead of 2011 monthly average to-date of 87.82%. Not that the RTE would bother mentioning that.
  • Relative to the peak, value of retail sales is still down 24.10% in November.
  • In Volume terms, there was a 1.6% monthly rise from 91.9 in October to 93.3 in November. This is statistically insignificant difference too. In 2 months through November, index of the volume of retail sales rose 1.97%, in May-June it was up 2.07% and we do know that it was not exactly boom time on the high street back then.
  • Volume index is now down 0.8% yoy and 19.8% down on peak. 3moMA is at 92.23 and 6mo MA at 92.47. However, 2010 monthly average is at 93.6, which is ahead of November monthly reading. So, as with value index, the 'record sales' in November are lower than the average monthly sales volumes in 2010. 
Charts to illustrate:

Frankly, I am not seeing anything that jumps out on an extraordinary scale. Some uplift, most likely supported by the decline in foreign travel for shopping and by better weather conditions this year than in 2010, but hardly spectacular. Only notable increases yoy are in Non-specialized stores ex-Department Stores (where inflationary pressures drove value up 1.4% while volume was up only 0.5%), Fuel (where inflation was so rampant that value of sales rose 10.3% while volume of sales fell 3.7%) and Electrical goods (where season sales started early and cuts were running deep with value +0.5% and volume up 7.5% yoy). everything else was either down or flat. You tell me if this is something that we can cheer about?

Let's take another look at the pure index numbers: 
  • Value index at 88.2 was the highest reading since June when it stood at 88.8. In last 12 months through November, index was in excess of 88.2 or equal to it on 5 occasions other than November 2011, which makes this month's reading oh, sort-of average.
  • Volume index at 93.3 in November 2011 is the highest since 93.8 in June 2011 and is the 4th highest in the last 12 months - also not exactly a trend-breaking performance.

So adjusting for motors sales, core retail sales indices were:
  • Value of core retail sales rose 1% mom from 94.6 to 95.6 in November. November 2011 reading is 0.1% ahead of November 2010 reading and the current index stands at the 5th highest reading level over the last 12 months.
  • Relative to peak value of core retail sales is down 19.39%. 2010 monthly average reading is 97.57% - ahead of November 2011 reading. More ironically, year-to-date 2011 average monthly reading is 95.62 which is identical to the November 2011 reading.
  • By all possible comparisons, November 2011 reading for the Value of core retail sales (ex-motors) is average.
  • Volume reading reached 100.6 - the first over-100 reading since April 2011. Index is now up 1.8% mom and down -0.8% yoy. This is the set of numbers that excited the RTE the most.
  • Yet, 2010 monthly average reading for this index was 102.7 - above the November 2011 reading. However, importantly, 2011 year-to-date average monthly reading is 99.7 - statistically insignificantly different from November 2011, but still below November reading in actual terms.
  • Still, November 2011 is worse than the average month of 2010. Not exactly a strong performance.

Charts to illustrate:

Ok, let's summarize the above: supposedly we had an exciting retail sales month in November. Yet, by all measures CSO reports, November performance this year was worse than average monthly performance in 2010, and by 3 out of 4 measures reported by CSO, November was worse than the average month in 11 months from January 2011 through November 2011.

Oh, and as an aside, here are the comparatives in retail sales volumes across Ireland, EU17 and EU27 (data reported with a monthly lag here, so latest we have is for October sales):

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