Importance
Retail sales are a major indicator of consumer spending trends because they account for nearly one-half of total consumer spending and approximately one-third of aggregate economic activity.

Interpretation
Strong retail sales are bearish for the bond market, but favorable for the stock market, particularly retail stocks. Sluggish retail sales could lead to a bond market rally, but will probably be bearish for the stock market.

Retail sales are subject to substantial month-to-month variability. In order to provide a more accurate picture of the consumer spending trend follow the three-month moving average of the monthly percent changes or the year-over-year percent change.

In an attempt to avoid the move extreme volatility, economists and financial market participants monitor retail sales less autos (actually less auto dealers which include trucks, too.) Motor vehicle sales aren't excluded because they are irrelevant, but because they fluctuate more than overall retail sales.

As indicated, retail sales are measured in nominal dollars and exclude the effects of inflation. Since economic performance depend on real, rather than nominal growth rates, compare the trend growth rate in retail sales to that in the CPI for commodities.

It is important to note that retail sales are subject to substantial revisions from month-to-month which makes it more difficult to discern consumer spending patterns. This problem underscores the need to monitor the moving average rather than just the latest one month of data. A new sampling methodology was begun in mid-1997 and may alleviate some of this problem over time.

Frequency
Monthly.

Source
Bureau of the Census, U.S. Department of Commerce.

Availability
Usually the second or third week of the month

Coverarge
Data are for the previous month. (Data for June are released in July.)

Revisions
Monthly, data for the two prior months are revised to incorporate more complete information

Annually, new seasonal adjustment factors are introduced in February with the release of January data. This revision affects at least three years of data. The magnitude of the revisions is usually moderate.