Retail sales to the rescue
Retail sales are broadly defined as the sale of durable and non-durable goods by domestic retail establishments (including on-line) to domestic households and tourists.
For most developed and emerging market economies retail sales are an important component of personal consumption and thus of overall GDP and historically growth in the global volume of retail sales has closely correlated with global GDP growth (see Figure 3).
We have created a monthly, GDP-weighted data series for the volume of global retail which includes the US, China, European Union, Japan, Brazil, Canada, Australia and Switzerland — economies accounting for over three quarters of world GDP.
Growth in this measure of global retail sales was relatively steady at 2.5–5.0% yoy in the wake of the Great Financial Crisis. Since November 2017, this growth has been slowing, hitting a 9-year low of just 1.9% yoy in December 2018. However, real retail sales growth rebounded in January-February to nearly 2.8% yoy — the lower-end of its long-term average.
This admittedly modest recovery in global retail sales growth supports our view that global GDP growth did not slow much (if at all) in Q1 2019 from about 3.1% yoy in Q4 2018, as argued in Three Themes: Low FX vol, EM contagion and global growth (5 April 2019).
This global data series masks significant country variations. At one end of the spectrum, the volume of retail sales in Switzerland contracted in year-on-year terms in January-February and growth slowed in Japan and Korea in the last three months for which data are available. However, retail sales growth in Brazil, Canada, China and the European Union (including Germany) has accelerated.
Retail sales growth in the UK hit 4.8% yoy in Q1, its fastest rate since Q4 2016, driven by a steady rise in the growth rate of real aggregate weekly earnings.
US retail sales growth — which slowed sharply in September-December — stabilised in Q1 2019 at around 1.3% yoy but is seemingly being held back by a weakening in US consumer confidence.
Sign up for a 30-day free trial with 4X Global Research and gain access to exclusive content from Olivier Desbarres
