Economic Preview: Retail Sales

Thursday's Retail Sales is a highlight in an uneventful week for economic data in the run up to Christmas. The report is due to be released by the U.S. Department of Commerce at 8:30am eastern time today.

The Retail Sales Economic Indicator

Retail Sales tracks the change in the total value of inflation-adjusted sales within the retail sector, using a sampling of companies both large and small. A highly timely indicator, retail sales is released only about two weeks after the month it covers. Due to the freshness of the data, it is considered a 'coincident indicator', one that reflects the current state of the economy. Retail Sales is the primary indicator of consumer spending, which makes up about two-thirds of total gross domestic product (GDP).

The release contains two parts, a total retail sales figure and a core retail sales figure, which excludes automobiles. 

Market Expectations

Today's data will show how well retail sales performed in the month of November. Analysts are expecting that growth accelerated last month to 0.6% from 0.4% in October. The core figure, excluding autos, is expected to come in at 0.2% from a reading of 0.2% in October.

Possible Market Reactions

A higher than expected figure is generally bullish for stocks and the U.S. Dollar, while a lower than expected reading is normally bearish for stocks and the U.S. Dollar. Figures that deviate far from analyst expectations are most likely to cause a significant move in the markets.

The Retail Sales figure is also important in that it can reflect inflationary pressure and thereby can influence Federal Reserve Monetary Policy in their efforts to reach the target level of 2 percent inflation. The December FOMC meeting is scheduled for next week, on December 17-18th.

The Initial Jobless Claims report from the U.S. Department of Labor is also due for release at 8:30am eastern time. Analysts expect that claims rose to 320K from 298K in the week that ended November 30.