Every month the Census Bureau releases the Advanced Monthly Sales for Retail and Food Services estimate for the month before. The bureau also releases an estimate for the month before, and the data is collected quarterly. Retail sales are a key indicator of the health of the economy. Learn more about the estimate, its importance, and the latest reported figures.

What Retail Sales Mean for You

As an important measure of economic activity, retail sales are watched closely by investors, policymakers, and businesses. Rising retail sales often show a growing economy, while declining sales indicate a contracting economy. By keeping an eye on this report, you can gauge where the economy may be headed, and what that may mean for your household finances.

How Is Retail Sales Report Data Collected and Used?

The Census Bureau report measures the U.S. retail industry each month by surveying around 5,500 employer firms to collect retail sales data. It shows the total sales and the percentage change for that month and reports on the percentage change in year-over-year (YOY) sales for the last 12 months.

Retail sales signal trends in consumer spending, which drive almost 70% of economic growth. Consumer spending is part of a country’s gross domestic product (GDP), which is used as a general indicator of how an economy is doing. Since the retail sales report comes out monthly, it is a more current measurement of economic health than GDP, which is reported quarterly. You can use the retail sales report to gauge the economy if you use it in context with other issued reports and economic conditions. If reports and conditions accompany a continuous monthly increase in retail sales, there is a good chance that the economy will continue growing.

Retail Sales Are Included in Other Reports

The information included in the retail sales report is used to create the personal consumption expenditures index, which is the measure of inflation that the Federal Reserve uses to set monetary policy. Personal consumption expenditures include purchases of durable and nondurable goods. It also includes services like housing, health care, retail, transportation, education, and many others. To gain a measurement of spending (by consumers) to production (by the entire country), economists divide personal consumption expenditures over a period by gross domestic product for the same period. This tells them how much of GDP growth (or shrinkage) consumer spending makes up. GDP is an annualized number. GDP growth compares this annualized figure to the prior year. Keep in mind that GDP growth uses real GDP figures, which eliminates the effects of inflation. The YOY retail sales reports use nominal GDP figures, which do not adjust for inflation. GDP growth reports and YOY retail reports could have significant differences if inflation is very high or if there is deflation.

Retail Sales Are Tracked by Investors and Businesses

Investors and businesses also use the retail sales report as an economic indicator to monitor the business cycle. Several economic indicators are used in conjunction to see where in the business cycle the economy is or where it might be headed. The report can help them create strategies for dealing with downswings or taking advantage of upswings.

Other Retail Reports

The National Retail Federation (NRF) surveys shoppers to find out how much they plan to spend on the major holidays. For instance, the report on Halloween spending provides early clues for the holiday shopping season. The NRF also reports on retail sales for Valentine’s Day, Mother’s Day, Father’s Day, and Back to School.