US retail sales
According to data provided by the U.S. Census Bureau, US retail sales rose 0.6% in July 2017, which beat the market’s expectations of a 0.4% rise. Retail sales fell 0.2% in June 2017. In July, retail sales had a strong performance—the highest figure since January 2017.
Components of retail sales
The stronger retail sales in July were mainly due to stronger sales in home appliances, motor vehicles, and sporting goods. Core retail sales, which closely reflect the performance of the GDP’s consumer spending segment, also rose nearly 0.5% in July 2017. Core retail sales beat the market’s expectation of a 0.3% rise.
Impact on the market
The S&P 500 Index (SPY) showed a strong improvement in past months. On a year-to-date basis, the index returned nearly 9.2% as of August 23, 2017. The marginal improvement in some economic indicators and the expectation of huge reforms in the economy mainly helped the index move higher. Recently, we saw some pullback on the S&P 500 Index. Many political factors are dragging the index down.
In the past five months, the retail sales didn’t meet the market’s expectation. The retail sales figures weren’t impressive. Now, stronger retail sales are improving investors’ confidence in the economy (IVV) and the market. Rising retail sales signal that consumer activity is improving in the economy (QQQ) (VFINX).
In the next part of this series, we’ll analyze how the US Consumer Sentiment Index performed in August 2017.