Merk Investements: Advance Retail Sales

Advance retail sales for the month of August fell -0.3% m/m and -0.4% y/y. Core ex-auto sales declined -0.7% m/m and were up 4.2% y/y. Ex gas retail sales were flat for the month, while the ex-autos and building materials dropped -0.6%. The ex-autos & gas saw retrenchment for the month falling -0.4%.

The primary catalyst for the fall in retail sales, as expected was the decline in purchases at gasoline stations which fell -2.5%. Sales of electronics declined -1.3%, building materials -2.2% and general merchandise -0.2%. Retailers saw sales fall -1.5% at department stores and -2.3% at non-store retailers, which is a proxy for e-commerce. Sales of furniture were flat, increased 0.7% and climbed 0.3% in the health and personal care category.

The advance retail sales for August represent the first snapshot of the condition of the consumer post fiscal stimulus. The below consensus print implies that clouds are gathering with respect to personal consumption for the remainder of the year. The fact that purchases at gasoline stations declined -2.5% for the month and consumers did not utilize those savings for consumption elsewhere is more than a bit troubling. Moreover, the fact that retailers did not see any real movement on the back of back to school sales during a time when the cost of gasoline declined in the manner that it did is a sure sign of problems ahead for the consumer.

This report was prepared by Merk Investments LLC, and reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any investment product, nor provide investment advice. Merk Investments does not own any of the stocks mentioned; this is not an offer to buy or sell any security mentioned.

Merk Investments: Advance Retail Sales: August 2008