September 2011 Retail Sales Remain Strong but Growth is Slowing

Inflation adjusted retail sales growth rates (advance release) may have broken slightly out of the previous downward trend channel – but still remain in a downward trend.  Sales continue to grow but an ever slowing rate.

The headlines say retail sales are up 1.1% month-over-month and up 8.1% year-over-year.   Econintersect’s analysis is down 0.25% month-over-month and up 8.6% year-over-year.

From the US Census Bureau press release:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for September, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $395.5 billion, an increase of 1.1 percent (±0.5%) from the previous month and 7.9 percent (±0.7%) above September 2010. Total sales for the July through September 2011 period were up 8.0 percent (±0.7%) from the same period a year ago. The July to August 2011 percent change was revised from virtually unchanged (±0.5%)* to +0.3 percent (±0.2%).

Retail trade sales were up 1.1 percent (±0.5%) from August 2011, and 8.1 percent (±0.7%) above last year. Gasoline stations sales were up 20.3 percent (±1.7%) from September 2010 and nonstore retailers sales were up 10.1 percent (±2.3%) from last year.

The difference between the headlines and Econintersect are due to different approaches to seasonal adjustment.

September was again a record month, with 8 of the last 10 months having record sales.

The impact of the monthly retail sales data on GDP is not straight forward. Real GDP (of which the consumer is over 60%) is adjusted for inflation. Further, GDP is an analysis of quarter-over-quarter or year-over-year growth. When retail sales are adjusted for inflation, the clear downtrend is visible.

The weakest areas in retail sales this month are sporting goods, building materials and food / beverage.

Our colleague Doug Short has shown that the absolute level of retail spending is not very impressive when adjusted for population growth:

Click on graph for larger image.

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