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US Retail Sales Steady, Manufacturing Output Declines

Posted by Joseph Trevisani on Sep 15, 2015 11:24:00 AM

Retail sales climbed for a second straight month in August indicating that consumers may be unfazed by the recent equity market turmoil.  

The 0.2 percent rise followed July’s adjusted 0.7 percent gain, according to the Commerce Department today. Economists int he Bloomberg survey had forecast a 0.3 percent gain.

American industrial output lost 0.4 percent in August, twice the prediction, the decline was mitigated by July's upward revision to 0.9 percent from 0.6 percent.

Manufacturing production which makes up about 12 percent of the overall industrial economy, fell 0.5 percent in the month, worse than the -0.3 percent forecast. July’s output was adjusted 0.1 percent higher to 0.9 percent. Excluding automobiles manufacturing was unchanged. 

Capacity utilization, the percent of the U.S. industrial base in use, dropped to 77.6 in August from July’s 78.0 percent level, missing the 77.8 forecast. 

Retail sales numbers are often heavily revised after the initial release because the sales data that informs the first issue is usually collected during the first two week of the month.  As more complete information becomes available it is incorporated into the revision that accompanies the subsequent month’s release. 

This collection schedule makes it hazardous to base economic assumptions on the initial numbers, particularly when important events take place later in the month.

In this case the massive global stock market declines that have erased 6.1 percent from the Dow since July 31st did not begin until August 20th, a week after data collection for the August retail sales number finished. At its worst level on August 24th the Dow was down 13.1 percent from its opening level for the month and it closed off 6.6 percent on the 31st. 

The revised figures for August will be released with the Septemberetail sales numbers on October 14th. 

Retail sales excluding automobiles rose 0.1 percent in August, half the forecast and the prior month was revised higher to 0.6 percent from 0.4 percent. 

The so called 'retail sales control group', the data category that closely mimics the consumption component of GDP increased 0.4 percent in August, better than the 0.3 percent prediction. More importantly for tracking third quarter economic growth, July's result was doubled upon revision to 0.6 percent from 0.3 percent.  

The Atlanta Federal Reserve’s GDPNow estimate for annualized third quarter GDP was unchanged at 1.5 percent after the release. 

Ten of 13 major retail classifications saw gains in August including car, restaurants and apparel stores.  

Receipts at gasoline stations fell 1.8 percent, partially reflecting the 7.5 percent drop in the cost of gasoline last month.  The Commerce Department’s retail sales figures are not adjusted for price changes. 

Automobile productions fell 6.4 percent in August after rising 10.6 percent the month before. Utility output increased 0.6 parent 

Manufacturing in the New York Federal Reserve district, comprising New York State, Northern New Jersey, Western Connecticut, Puerto Rico and the U.S. Virgin islands, contracted in September for a second month.

The Empire State Index from the New York Fed was little changed in September at -14.67 from -14.92 in July. New orders improved to -12.91 from -15.70 but the index of the number of employees dropped -6.19 from 1.82

 

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Charts: Bloomberg

retail sept 15

ip sept 15

mfg sept 15

 

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