65. Trading the News - Economic Numbers - Retail Sales

http://www.informedtrades.com/ A look at how the make up of the Retail Sales number and how this economic indicator moves the stock, futures, and forex markets. Example Release: http://www.census.gov/svsd/www/marts_current.html Lesson on InformedTrades.com: http://www.informedtrades.com/15297-trade-news-how-interpret-retail-sales-number.html The retail sales number is released at 8:30 am on or around the 13th of each month, and is an estimate of the sales of goods by all retail establishments in the United States. These goods fall into the personal consumption expenditures category, which as we discussed in our lesson on GDP, makes up over 65% of the US Economy. Although the number does not include anywhere near the data that is included in GDP, since this number is released for each month (where GDP is released for each quarter) it is closely watched by the Fed and other market participants as a timelier indicator of what is happening with the consumer. In addition to the widely reported headline number, the report that is issued along with the retail sales number includes a breakdown of retail sales growth by category. With this in mind the report is not only a good indicator of overall consumer activity, but also for how different parts of the economy such as automobile, restaurant, clothing and electronics sales are fairing. If you are trading the stock of a company which sells products related to one of the categories reported in the retail sales release, then it is obviously important to understand that what happens with the growth of that category is most likely going to have a direct affect on the price of the stock that you are trading.