Sunday, 2 February 2014

Does the Greek retail sales spike imply a household consumption uptick ?

Greek retail sales’ figures for November came out this week and after a long time (namely since the 1st quarter of 2010) the volume index’s sign was positive. What are the repercussions of that for household final consumption expenditure?

I made a rather simple, or simplistic if you prefer, calculation using the retail sales volume index. As far as I know, ELSTAT does not publish quarterly series for retail sales, so I computed the quarterly figures using the monthly ones. My next thought was that it would be interesting to plot my freshly-computed quarterly retail sales figures against ELSTAT’s quarterly Household & NPISH final consumption expenditure. Here’s the end-product.

source: ELSTAT, own calculations

Retail sales are more volatile than household & NPISH final consumption expenditure, both on the downside and on the upside and sometimes lead consumption. Hence the fact that retail sales slipped into positive territory in November 2013, making the Q4*(comprising just of October and November, mind you) figure turn positive too, does not mean that household final consumption expenditure will turn positive. What it could mean though is that the 4th quarter of 2013 could see the lowest contraction in household final consumption in a long time.

The obvious question is if that is a blip or does it signal the bottoming of retail sales (at least in volume terms)? We’ve been there before with the manufacturing production index where a spat of positive readings in late 2012- early 2013 proved to be nothing other than a head-fake. Frankly, the situation in Greece is very fluid right now making the quest for concrete conclusions nigh on impossible, so the only thing we can do is wait and see (and maybe keep our fingers crossed in the process)…

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