Sunday, June 2, 2013

Summer doldrums ahead for retail sales?

National chain store sales 0.6% in the first three weeks of May from April, according to Redbook Research.  Sales for the week rose 2.7% year-over-year. 

But are retail sales poised to encounter a summer slow-down?  That possibility is suggested by the recent behavior of the New Economy Index (NEI), which measures the stock price performance of the leading U.S. retail and business economy companies. 

The latest NEI chart, as of May 31, shows that while the dominant intermediate-term trend remains up (see black arrow) the short-term trend is slightly down (red arrow).  NEI reached an all-time high on Jan. 21 and has been making a series of slightly lower highs ever since.  While the overall trend of retail sales as reflected by NEI remains up, it would appear that the retail economy may encounter a period of sluggishness ahead.  That sluggishness would most likely occur during the “summer doldrums” period.

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