Core Retail Sales data is an important economic indicator that reflects the magnitude of the change in the value of retail sales, excluding car sales. These data are released monthly, reflecting changes in consumer spending, which accounts for a large part of overall economic activity. These data are considered important indicators in the financial markets because they contribute significantly to determining the trends of the economy.
Recent data shows that core retail sales increased by 0.1% m/m, which is lower than the expected 0.3% increase. The announced percentage is also much lower than the significant 1.0% increase recorded in the previous month. This discrepancy in numbers may have an impact on financial markets, as investors expect higher numbers based on initial expectations.
It’s important to note that car sales account for about 20% of total retail sales, but since these sales are subject to extreme fluctuations.
they are excluded from underlying data to provide a more accurate measure of consumer spending. Therefore, fundamental data is the best measure of general economic trends, as it more credibly reflects consumer behavior.
This data is a preliminary measure of economic health in the United States, as investors are watching it closely to understand the future directions of the economy, especially in terms of consumer spending. They also directly influence political and monetary decisions, as changes in retail sales can indicate the level of confidence in the economy.
For example, if the data is better than expected, it may indicate an increase in economic activity, which may push the dollar higher.
while if the results are lower than expected, it may indicate an economic slowdown, leading to a decline in the currency.
The impact of retail sales on the US dollar
Retail sales are important economic indicators that contribute significantly to determining general economic trends, and have a strong impact on the US dollar. When the U.S. government releases retail sales results.
especially data on core retail sales (which excludes auto sales), it provides important insights into the level of consumer spending in the economy.
Consumer spending is the main driver of economic growth in the United States.
making these data pivotal in assessing the overall economic situation.
When publishing retail sales data, any larger-than-expected increase in core retail sales is often viewed positively by financial markets. This suggests that consumers are still spending strongly, reflecting a high level of confidence in the economy.
In this case, this could lead to increased demand for the US dollar, as investors bet on continued economic growth. On the other hand, if retail sales are lower than expected or decline, it is a sign of a decline in economic activity, which could lead to a decline in the dollar as a result of declining confidence in the stability of the economy.
The impact of retail sales on the dollar is compounded when this data is combined with other economic factors.
such as the decisions of the US central bank (Fed). For example, if economic data shows strong growth in retail sales.
the Fed may see no need to stimulate the economy by cutting interest rates, which could support the dollar.
Conversely, if the results point to an economic slowdown, the central bank may decide to cut interest rates to encourage spending, reducing the dollar’s attractiveness to investors.
The impact of retail sales on stock markets
Retail sales are one of the vital economic indicators that significantly affect the stock markets. This data is a key measure of consumer spending, which makes up a large portion of economic activity in the United States.
Therefore, changes in retail sales can have a noticeable impact on the performance of stock markets.
as growth in sales reflects the health of the economy and increased confidence in consumers’ ability to spend.
When retail sales data comes in higher than expected, it is a positive sign for the economy, contributing to optimism among investors. An increase in retail sales typically indicates that consumers are buying more goods and services.
which means that companies operating in retail and related sectors may see an improvement in their profits.
This can push the shares of these companies higher.
which in turn leads to the overall push stock markets towards gains. Thus, this type of data is positive for the markets, as it encourages investors to increase their investments in stocks.
On the other hand, if retail sales are below expectations, it is a negative signal for the economy.
which could raise concerns about slowing economic growth. When consumer spending shows a decline, corporate expected earnings may decrease, especially in the retail sector.
which can lead to a decline in their share prices.
This decline in expected earnings may in turn affect the markets in general, leading to a widespread decline in stock markets. In addition, retail sales data affects stock markets by influencing the Fed’s monetary policy decisions. If retail sales are weak, the Fed may see it as necessary to cut interest rates to stimulate the economy.
which could contribute to higher stock prices.
