Retail sales figures for August are out this week with some positive, if only fragile, news.
- Core retail sales Value Index rose to 96.0 from 95.3 in July, up 0.73% m/m. Value index is still down 0.31% on 3mo ago, but the index is up 1.48% y/y.
- 6mo MA is at 95.42, so August reading is slightly ahead of the longer-term average. Previous 6mo MA through February 2012 was at 95.3.
- August reading is still below the 2010-2011 average (96.63).
- August marked second consecutive rise in Value index, although the overall index still did not fully recover from June sharp drop.
- Core retail sales Volume index remained relatively unchanged in August at 99.2 after posting 99.1 reading in July. The index is up on 98.0 in July, but is still below May reading of 99.5.
- Volume index in August was at -0.30% below the reading 3 mo ago and is up 0.3% y/y. The gap between volume and value indices changes over the last 12 months suggests acceleration in inflation.
Charts below show overall trends, including the trends in consumer confidence:
As usual, my own Retail Sector Activity Index (RSAI) based on the above series:
RSAI rose to 110.1 in August from 108.9 in July due to a combination of increases in the Value and Volume Indices and Consumer Confidence. RSAI is now 1.15% up m/m and 6% up y/y with core y/y driver being consumer confidence (+25.4% y/y in August). The problem is that on general, the Consumer Confidence indicator is largely irrelevant as a metric to the sector performance. For example, all indices set at 100=2005 level of activity. By this metric, Volume of activity is still down 0.82%, while the Value index is down 4.0% on 2005 levels of activity. Consumer Confidence is 38.3% up.
So the positives are, at least through August, as follows:
- Value Index of retail sector activity is up 2 months in a row, but at a weak rate of increases so far;
- Volume index is basically flat (at least not declining)
- Confidence is up, but I would advise serious caution in interpreting this.
- RSAI is up and may be signaling some future firming up in sales, assuming confidence indicator is not going completely out of connection with the real economy.