Dow Shrugs Off Slow Retail Sales Growth

The Dow Jones Industrials (DJINDICES: ^DJI  ) edged up 0.5% today, despite mildly disappointing retail and consumer confidence reports.

Retail sales in July grew by just 0.2%. That's a little bit slower than the 0.5% economists had expected, and the 0.4% growth we saw in June.

Slow income growth, a tough job market, and the expiration of stimulus measures like the payroll tax cut have been biting into customers' spending power. Consumer confidence also declined in September.

But it's important to keep individual monthly reports in perspective. The monthly retail sales report has a margin of error of 0.5%, an amount almost double the surprise.

What's more, retail sales growth does tend to flop around at least once a year, so some variability in the rate of growth is nothing new, even if it does eventually represent the start of another short-term hiccup along the longer-term recovery:

Unless we start to really see several months of poor reports, the bigger picture is that retail sales have been growing at a pretty healthy clip, despite the fact that it's not making up the lost ground from the financial crisis as fast as we might like:

About half of the growth this month came from auto sales, which have been one of the brighter spots in the recovery, and rose 13.3% over last July. In August, Ford (NYSE: F  ) reported its best sales month in seven years, and plans to boost fourth-quarter production, while General Motors (NYSE: GM  ) also saw excellent sales growth. Cars on the road are at a record high age, and there's still a lot of pent-up demand left for customers to fill.

Department stores have been faring the worst of any category, showing a nearly 5% sales decline so far in 2013.

Three companies ready to rule retail
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2637297, ~/Articles/ArticleHandler.aspx, 11/27/2014 9:30:30 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 11 hours ago Sponsored by:
DOW 17,827.75 12.81 0.00%
S&P 500 2,072.83 5.80 0.00%
NASD 4,787.32 29.07 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

11/26/2014 4:31 PM
^DJI $17827.75 Up +12.81 +0.00%
DOW JONES INDUSTRI… CAPS Rating: No stars
F $15.61 Down -0.07 +0.00%
Ford CAPS Rating: ****
GM $32.07 Down -0.16 +0.00%
General Motors CAPS Rating: ***

Advertisement