What are Retail Sales?

What are Retail Sales?

Retail sales measure consumer spending at stores and online. In economies where consumption is the largest GDP component, the report heavily influences growth and policy expectations. FX traders watch it for its impact on yields and risk sentiment.

What to Watch

• Headline vs. Core: Core excludes autos and gasoline to reduce volatility.
• Control group: A subset that feeds directly into GDP calculations.
• Nominal vs. real: Strong nominal sales during high inflation may mask weak volumes.

Categories and Control Group

The control group excludes autos, building materials, gas, and food services, making it a better input to GDP. Strong nominal growth during high inflation may still imply weak real consumption—pair sales with price indexes to infer volumes.

High‑Frequency Signals

• Card‑spending trackers and shipping data provide early reads on momentum.
• Retailer guidance and earnings color the quality of demand.
• Consumer sentiment helps explain divergences between income and spending.

Trading Implications

• Cross‑check with card spending trackers and retailer guidance for confirmation.
• Compare the surprise to what rates price; outsized OIS moves typically lead FX.
• Watch discretionary vs. staples to gauge risk appetite and income effects.
• Blend results with labor and inflation data to validate macro theses.

In practice, strong core control group growth that lifts GDP tracking can support the currency if it tightens the policy outlook. Weak sales alongside soft inflation cools rate expectations and usually weighs on the currency—unless external growth outperforms peers.

Seasonality and holidays can distort prints—focus on multi‑month trends and revisions. Cross‑check with employment income growth; if wages are slowing, resilient sales may reflect credit usage and prove unsustainable.

For FX, the impact runs through yields and policy odds. A series of upside surprises that lift GDP trackers and tighten labor utilization tends to support the currency. When upside is concentrated in volatile categories while core control lags, fade overreactions unless rates confirm.