30/9/2012: Retail Sales data for Ireland August 2012

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:

1. Value Index of retail sector activity is up 2 months in a row, but at a weak rate of increases so far;
2. Volume index is basically flat (at least not declining)
3. Confidence is up, but I would advise serious caution in interpreting this.
4. 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. 

22/12/2011: Retail Sector Activity Index: November 2011

I covered detailed retail sales for November data in the previous post (link here). Now is the time to update the Retail Sector Activity Index.


It is worth noting that my Retail Sector Activity Index for October has predicted November moderate uplift in sales - a nice surprise for the index just created:
"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)."


As shown in my detailed analysis (linked above), the retail sales did indeed improve in November, and the improvement took place across all three possible drivers (depending on specific areas of sales):
" 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."

So now to that data update:

• Retail sales (core) volume index rose to 100.6 in November from 98.8 in October. 
• Retail sales (core) value index rose from 94.6 in October to 95.6 in November
• Consumer confidence, however, declined from 63.7 in October to 60.1 in November.

The above implies that RSAI have dropped slightly from 108.64 in October to 107.96 in November. Dynamics however remain encouraging for continued firming up of sales:

• RSAI November reading is 3% ahead of 3mo ago, and 5.33% above the reading a year ago.
• 6mo MA now stands at 105.94, ahead of previous 6mo MA of 104.91, signaling what can be a moderate uplift.
• For comparison, 2006-2007 average is 125.41.

Charts to illustrate:

Medium-term, however, the indices remain below historical trends, with more firm confidence still failing to drive up retail volumes and values:

In other words, structural weakness in the sector remains unchanged. It will take couple of months of solid gains in retail sales (annual gains of 1.5-2% minimum per month) to deliver signs of real structural improvement.

29/11/2011: Retail Sector Activity Index: October 2011, Ireland

In the previous post I detailed the latests retail sales stats for Ireland. Here, I am updating my own Index of Retail Sector Activity - a weighted average of value of sales, volume of slaes and leading consumer confidence indicator. The index reflects changes in employment and profit margins conditions in the sector.

Table below summarizes the changes in all three components, and charts below illustrate:

A large jump ion 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).

As charts below show, RSAI still remains consistent with actual retail sales volume and value performance at below the levels consistent with medium-term consumer confidence reading:

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.