What is Retail Sales m/m?
Retail Sales m/m measures the month-over-month change in the total value of retail sales. This indicator is important because consumer spending is a key driver of economic activity in many countries. Retail Sales data is often used by economists, policymakers, and investors to gauge the health of the economy and consumer confidence.
What is Core Retail Sales?
It refers to the same retail sales data as Retail Sales m/m but excludes items that tend to be volatile and could distort the overall picture—such as auto sales, which account for about 20% of total Retail Sales m/m and are highly volatile due to uncertainty in consumer demand for vehicles. By excluding other similarly volatile components, Core Retail Sales provides a clearer view of underlying consumer spending trends.
The difference between Retail Sales m/m and Core Retail Sales.
Basically, Retail Sales m/m provides a broad picture of consumer spending patterns across all retail categories, while Core Retail Sales focuses specifically on more stable areas of consumer spending by excluding volatile components. Both indicators are important for understanding economic conditions and consumer confidence, but Core Retail Sales offers a more detailed analysis by filtering out highly variable factors such as auto sales and gasoline.
Both Retail Sales m/m and Core Retail Sales are important economic indicators used to assess the strength of consumer spending and evaluate the overall health of the economy.
Impact on the U.S. Dollar
If Retail Sales m/m and Core Retail Sales are strong: This indicates robust consumer spending and economic growth, leading to expectations of higher interest rates. As a result, the U.S. dollar strengthens due to positive economic sentiment and higher interest rates attracting foreign investment.
If Retail Sales m/m and Core Retail Sales are weak: This indicates weak consumer spending and economic concerns, leading to expectations of lower interest rates or continued low rates. As a result, the U.S. dollar tends to weaken due to negative economic sentiment and declining interest rates.
Impact on Gold & the U.S. Dollar
Strong Retail Sales m/m and Core Retail Sales: Reduce the demand for safe-haven assets such as gold due to increased economic confidence. Higher interest rates raise the opportunity cost of holding non-yielding assets like gold, leading to a decline in prices. Additionally, a stronger U.S. dollar makes gold more expensive for foreign buyers, reducing demand and further pushing gold prices down.
Weak Retail Sales m/m and Core Retail Sales: Increase the demand for safe-haven assets like gold due to rising economic uncertainty. Lower interest rates reduce the opportunity cost of holding gold, leading to higher gold prices. A weaker U.S. dollar makes gold cheaper for foreign buyers, boosting demand and pushing gold prices higher.
Summary of the figures
The figures from both reports are converted into percentage numbers for public release, as they compare the current month to the previous month. If the percentage is higher than the previous month, it is considered positive for the economy. Conversely, if the percentage is lower than the previous month, it indicates that the economy has worsened this month.
