USA retail sales for August 2012 and the trend

The latest USA retail estimates were published today for August 2012. In some previous posts, a Henderson filter was used to calculate a trend estimate and looked at the impact of revisions to both the seasonally adjusted and trend estimates. With the new estimate for August 2012 the analysis can be updated.

The seasonally adjusted estimate for August was reported to have risen by 0.9% when compared July 2012. This comes after a similar increase in the seasonally adjusted estimates last month. So two increases in a row. With a trend line calculated using a Henderson filter this looks like:

Trend estimate for USA retail trade series up to August 2012

So even with the two very large kick ups in the seasonally adjusted estimates, the trend has coped with this. This can help us put things into perspective and not get too carried away. While two recent large increases in the seasonally adjusted estimates are a good sign, normally we should take the rule of thumb that once is random, twice is coincidence and three times makes a trend. So in this respect, the impact of the two recent increases in the seasonally adjusted estimates are moderated down when considering the trend estimate.

The data we’ve used is:

Nov 2011 Dec 2011 Jan 2012 Feb 2012 Mar 2012 Apr 2012 May 2012 Jun 2012 Jul 2012 Aug 2012
Trend 0.63 0.62 0.53 0.35 0.16 0.03 -0.04 -0.03 0.01 0.02
Seasonally adjusted 0.47 0.04 0.64 1.03 0.37 -0.51 -0.12 -0.74 0.63 0.89

where the trend growth over the last five months is pretty much flat, even while the seasonally adjusted estimates have bounced all over the place. This compares to the previous months results of:

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

And how about the revisions? There are some revisions to the recent seasonally adjusted estimates, e.g. previously published of 0.81% now revised down to 0.63%. We can see that the last three trend estimates have been reasonably robust to the changes in the seasonally adjusted estimates. The blue line on the chart below shows the latest trend estimate for August 2012, with a slight revision upwards compared to the previous trend estimates for June and July 2012. This is primarily caused by the kick up in the most recent August 2012 estimate.

Revision to USA trend and seasonally adjusted estimates up to August 2012

You can also see how the seasonally adjusted estimates have been revised slightly with each release. As I mentioned previously, to get improved quality and the most up-to-date estimates, revisions to the original and seasonally adjusted should be taken on each month. Continual revisions mean continuous improvements. Who wouldn’t want the most up to date data?

With a similar increase in the seasonally adjusted estimates next month, we’d likely see some bigger revisions to the trend estimate. So currently we could say the trend growth in the USA retail sales over the last few months is relatively stable. So while there are some good signs in the seasonally adjusted estimates don’t get too excited.