In July, retail sales fell by 0.7% over the month and rose by 2.3% over the year. This was considerably lower than expected. Sales in durable goods rose by a meager 1.3% y/y, while non-durable goods showed good growth at 2.3%.
According to the press release the unusually warm July weather might have kept consumers away from the shopping centers. However, retail sales have disappointed also in May and June so this may only be part of the explanation.
The weak retail sales figure is fully consistent with the eroding consumer sentiment. Yesterday’s sharp drop in consumer confidence indicator (CCI) is however also hard to explain. The decline of the CCI was only due to weak answers to a few questions. In fact, household expectations of both their own economy and the overall economy improved in August.
We would therefore argue that it is yet too early to draw the conclusion that the trend in retail sales has turned to the worse. Looking at the positive trend of income, employment, house prices and credit growth we would rather expect both consumer confidence and retail sales to improve from here.
Details, July
y/y: 2.3 % (Nordea 4.0%; consensus 4.1%, prior 3.4% revised from 3.3 %)
m/m: -0.7% (Nordea 0.4%; cons. 0.3%; prior 0.4% revised from 0.5 %)
Nordea