Merk Investments: Retail Sales
Advance retail sales for the month of July declined -0.1% m/m and 4.5% y/y. The core ex-autos estimate advanced 0.4% and 7.8% y/y. Ex gasoline retail sales increased 0.4% m/m, ex-gas fell -0.2% and the ex-autos and gas advanced 0.3%. The ex-autos and building materials climbed 0.4% and the ex-food service estimate declined -0.1%.
Inside the data demand for motor vehicles and parts declined -2.4% and clothing fell -0.2%. Sales of furniture and at gasoline stations increased 1.0% and 0.8% respectively. Electronics advanced 0.8%, building materials 0.3%, food and beverages 0.4%, while sales of health and personal items fell flat.
Retail sales in July provided the weakest month of activity since February 2008 as the impact of the fiscal stimulus begin to wane. The combination of lighter pocketbooks and climbing gasoline prices extracted a more than modes toll from the sales environment. The overall number fell and sales activity outside of that at gasoline stations declined even further. The decline in clothing sales and modest increase in activity at department stores does not auger well for the upcoming back to school sales season. This data is consistent with our bearish forecast of personal consumption throughout the second half of 2008. Going forward a tight credit environment, a deteriorating labor sector and elevated prices will act as a significant constraint on consumption.
Joseph Brusuelas
Merk Investments
Chief Economist/VP Global Strategy
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