Retail sales ticked down 0.3% last week according to the International Council of Shopping Centers and Goldman Sachs Retail Chain Store Sales Index released this morning. The volatile week over week number, while significant, is not quite as important as the long term trends. The index of retail sales is up 2.5% from the same period last year. With news showing that the economy is starting to pick up, is there a reason for the lower numbers?
The biggest reason retail sales were down last week is simply due to the fact that Black Friday is near. This important shopping day has many people excited and ready to spend money. What it also means is that those who are anticipating a big shopping excursion the day after Thanksgiving have slowed their consumption in the past week. Shoppers slowed down in part to make Black Friday a more special time, and in part to have more money to spend on the biggest shopping day of the year. While the sales reports are down for last week, they are expected to be up next week. An ICSC survey shows that 24% of people expect to spend more to a lot more on gifts this year as opposed to last year.
While the index shows a slight dip in numbers, it is not too much different from the recent retail sales report for the month of October. While the retail sales report from the US Census Bureau, is a monthly report (as opposed to the weekly ICSC report), the reports are directly correlated. They measure different aspects of the market, and are affected by different factors (retail sales report showed a decline most likely due to hurricane Sandy), but they both help to give an overall view of the current economic situation.
Last week saw a small dip in the index, next week is expected to see a sharp rise. Every year the holiday season sees a lot of spending. Even during a recession people buy presents. As more people are finding work, and more people have good incomes, the spending will continue to rise. Most retailers have no qualms about how the season will turn out, and many are excited about the amount this year will bring in (enough to justify paying their workers holiday pay by opening on Thanksgiving Day).
The ICSC/Goldman index is a weekly report that measures same-store, or comparable-store, sales. It is a way to measure how the industry as a whole is reacting to current economic conditions, and is a way economists measure the health of retail stores. The report does not include restaurant or vehicle sales, instead relying on other retail sales.
This article was first published on http://moneyprime.com.