Retail Sales Report: a Critical Indicator in the Economy

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Retail sales are a total quantify of the sales of retail goods over a particular period of time. It’s typically based on data sampling that is calculated to model an entire country. The retail sales report tracks the dollar value of products sold within both fixed point-of-sale businesses and non-store retailers (including mail catalogs and vending machines), from a giant store to the smallest type of business. The report also breaks down sales record into groups such as food and beverages, clothing, and autos. Because of the high label price of auto sales which can add additional volatility to the data, the reports are often presented with and without the auto sales counting. In the U.S., the retail sales report is published by the Census Bureau and the Department of Commerce in the middle of every month. It includes the prior month’s data and is a well-timed indicator of the performance of important industry and the price level activity as a whole.

The retail sales report is strongly observed by economist, investors, and traders. It’s believed as a real-time indicator which reflects the current state of the economy. The retail sales figures are significant especially for those who directly spend money in retail companies. It’s also a big component of the total GDP in a country. The report is usually treated as a critical pre-inflationary indicator which makes the biggest interest from forex traders, stocks watchers and investors. By the time individual retail companies make their own sales figures and the government releases the report which is only a few weeks old, market can be very volatile as both sides are making such reports around the same time and the data is being processed.

If retail sales growth is slowing down, consumers may be in position of reducing their spending and it could be a signal of recession. A quick rise in the retail sales, which is possibly followed by a short-term interest hikes, may cause traders and investors make selling action and it may lead to a problem in the market because inflation creates declining in future cash flow for companies. The markets, indeed, do not like surprises. That’s why a higher figure than forecasted can generate selling actions as a consequence of inflationary fear.

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