Retail Sales m/m and Core Retail Sales m/m are important economic indicators that track consumer spending, which is a key driver of economic growth. Here’s a breakdown of each:
Forex Factory:
1. Retail Sales m/m:
- Definition: Retail Sales m/m measures the percentage change in the total value of sales at the retail level from one month to the next. It includes all goods sold by retail establishments, covering a wide range of industries, including automobiles, clothing, food, and electronics.
- Impact on the Markets:
- Economic Health: A strong increase in retail sales suggests robust consumer spending and confidence, indicating a healthy economy. This can positively affect the stock market as companies may report higher revenues.
- Inflation Indicators: If retail sales are rising sharply, it can signal potential inflationary pressures, which might lead the Federal Reserve to raise interest rates.
- Currency Markets: Improved retail sales can lead to a stronger currency as traders expect a growing economy.
2. Core Retail Sales m/m:
- Definition: Core Retail Sales m/m measures the same metric as Retail Sales, but it excludes certain volatile categories such as automobiles, gasoline, and building materials. This gives a clearer view of underlying consumer demand and spending trends.
- Impact on the Markets:
- Consumer Spending Insights: Core Retail Sales provide insights into consumer behavior by focusing on recurring expenditure patterns, as automotive sales can fluctuate significantly from month to month.
- Inflation Measurement: Just like Retail Sales, an increase in Core Retail Sales can indicate rising consumer demand, which might lead to inflationary concerns and influence interest rate policy.
- Market Reaction: Traders often watch Core Retail Sales closely because it is considered a more stable indicator of economic activity. Significant deviations from expectations can lead to sharp movements in the equity and currency markets.
Summary
Both Retail and Core Retail Sales m/m are essential for assessing consumer spending trends and the overall health of the economy. As a trader, following these indicators can help you anticipate market movements and adjust your strategies accordingly, as they often result in volatility in stock prices, currency values, and bond yields.
