USA retail sales for July 2012 and the trend

The USA retail trade estimates were released earlier today. Check out the full release here: http://www.census.gov/retail/.

Last month, we took the published seasonally adjusted data up to June 2012 and used a Henderson filter to estimate a trend series. See this post: http://www.seasonaladjustment.com/2012/07/18/three-falls-in-a-row-for-usa-retail-trade-estimates/ for all the details.

At the time we said “retail activity in the US has started to reach a turning point. But. And this is the big but. We’ll need more data to make sure. This is because it is difficult to understand if what we are seeing is due to random variation or a change in direction of the underlying trend.”

Now that this extra time point is available, how does this change the picture? A full time series with data up to July 2012 is below.

USA retail up to July 2012

The most recent seasonally adjusted estimate for July 2012 shows a 0.8% rise on the month. Calcuating a new trend estimate gives:

Nov 2011 Dec 2011 Jan 2012 Feb 2012 Mar 2012 Apr 2012 May 2012 Jun 2012 Jul 2012
Trend 0.64 0.63 0.53 0.34 0.17 0.04 -0.05 -0.08 -0.12
Seasonally adjusted 0.47 0.04 0.64 1.03 0.37 -0.51 -0.12 -0.73 0.81

Which compares to estimates that were calculated last month of

Nov 2011 Dec 2011 Jan 2012 Feb 2012 Mar 2012 Apr 2012 May 2012 Jun 2012 Jul 2012
Trend 0.66 0.63 0.50 0.33 0.19 0.08 -0.01 -0.07 n.a.
Seasonally adjusted 0.47 0.04 0.64 1.03 0.37 -0.51 -0.17 -0.48 n.a.

And pictorially this gives a revision to both the seasonally adjusted and trend estimates as below, where the green line is the old trend estimate using data up to June 2012, blue line is the new trend estimate using data up to July 2012, the red line is the latest seasonally adjusted data, and the light red line is the seasonally adjusted data at the release for June 2012.

USA retail up to July 2012 revision to June 2012

So, it was worth the wait for one more time point. Even with the promising kick up in the seasonally adjusted estimates of 0.8% in the most recent month (July 2012), retail trend growth in the United States has definitely flattened out.

With this new time point, there are two important observations. The first is the revision policy used by the USA for their seasonally adjusted estimates. From this chart it clearly shows that they have only revised the last couple of data points in the seasonally adjusted estimates, and the data points a year ago. This is a bit sneaky as we don’t have the latest up-to-date estimates for the whole series at each time point. But I’m pretty sure they would’ve used this in their internal calculations. However it would be more useful to revise the whole of the dataset to give everyone the most up to date information. The second point is that even with the data for July 2012 showing a large kick up in seasonally adjusted terms, the trend estimate that is derived is relatively unchanged. This can be one of the main reasons people shy away from the trend, but in this case, the story is pretty much the same as the trend estimate we observed last month. So rather than be excited about this 0.8% increase in the seasonally adjusted estimates, we should be mindful of the underlying trend.

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