Retail Sales Halt Three Month Decline, Rise 0.8 Percent

The Commerce Department reported(.pdf) that retail sales rose 0.8 percent in July following a downwardly revised decline of 0.7 percent in June, the most recent gains being broad based and likely influenced by positive seasonal adjustment anomalies after these factors had a negative influence during the spring.

All 13 major categories showed sales gains, the biggest advances being a 1.6 percent rise in sales at sporting goods/hobby stores and a 1.5 percent improvement at non-store retailers. Auto sales rose 0.8 percent and gasoline station receipts were 0.5 percent higher. Excluding autos, sales rose 0.8 percent last month and, excluding both autos and gasoline, sales were up 0.9 percent, the biggest gain in six months.

While it would be impossible to know without delving deep into the mysteries of seasonal adjustment math, I can’t help but think that we’re now back in “positive skew mode” for this very important adjustment to the data after seeing this same effect over the winter and then getting negative skew during the spring.

The same better-than-expected results are being seen in other seasonally adjusted data in recent weeks (e.g., the better than expected nonfarm payrolls growth earlier in the month) and with economic data that is not  subject to these adjustments still flagging (e.g., consumer confidence), July data appears to be about as believable as the data from January to June (i.e., not very).

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