Thursday, 29 June 2006

Retail sales up, but for how much longer?

Retail sales rose in Japan in May, and the World Cup apparently has something to do with it. Bloomberg reports:

Retail sales, which reflect sales at brick-and-mortar businesses including department stores and supermarkets, rose 0.1 percent in May from a year earlier, the trade ministry said in Tokyo. The median forecast of 21 economists surveyed by Bloomberg News was for sales to drop 0.6 percent...

Fuel sales surged 7.1 percent, accounting for almost 70 percent of the gains in retail sales, the trade ministry said. Prices at the pump climbed 11 percent in May from a year earlier, according to the Tokyo-based Oil Information Center. That adds 715 yen ($6.16) to the cost of filling the tank of a Corolla compact, Toyota Motor Corp.'s top-selling vehicle...

Sales of electronics, including flat-screen televisions and DVD recorders, rose 0.4 percent in May from a year earlier on a "World Cup effect," the trade ministry said. Sales of clothing dropped 2.5 percent, cars slipped 2.4 percent and food and drink declined 1.1...

On a seasonally adjusted basis, retail sales climbed 0.6 percent from April, the first gain in four months, the trade ministry said.

The Japanese need the DVD recorders to go along with the flat-screen TVs to watch the World Cup, but the British don't. From Reuters:

British retail sales growth held steady at a 1-1/2 year high in June as the World Cup soccer tournamant [sic] continued to lift sales of televisions and food, a Confederation of British Industry showed on Wednesday.

The CBI distributive trades sales balance held steady at +9 in June. That was marginally lower than expected but marked the third consecutive positive reading and equalled the May balance which was the highest since May 2004.

Retailers also expect sales growth to hold up next month, with the July expectations balance also coming in at +9.

So what happens to retail sales after the World Cup?

It's not just TV sales that may drop. MP3 players are already seeing saturation, at least in China. From Xinhua Online:

Recent data from German-based GfK research institute shows that the market for MP3 players in China's seven major cities has fallen over the past three months.

The sales of MP3 players in Beijing, Shanghai, Guangzhou, Chengdu, Wuhan, Shenyang and Xi'an have dropped an average of 12 percent in the past three months, China Business News reported on Tuesday.

And that is despite strong overall retail sales growth in China.

Retail sales of China's consumer goods grew 14.2 percent year on year to 617.6 billion yuan (77 billion US dollars) in May, the National Bureau of Statistics said Tuesday in its monthly report.

Saturation in demand for MP3 players could be hitting Apple too. Yesterday, Apple's shares fell to an eight-month low after a Wall Street analyst said updated versions of the iPod may be delayed. That is on top of other problems facing the top maker of MP3 players -- such as competition and falling margins -- as detailed by MarketWatch's Herb Greenberg.

Hanging over all this is the fact that consumer spending in the US is under threat from a slowdown in the housing market. From Reuters:

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended June 23 decreased 6.7 percent to 529.6 from the previous week's 567.6.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.86 percent, up 0.13 percentage point from the previous week, its highest level since April 12, 2002 when it reached 6.92 percent.

The MBA's seasonally adjusted purchase mortgage index fell 6.2 percent to 389.0.

The purchase index, which is considered a timely gauge of U.S. home sales, was substantially below its year-ago level of 477.4.

The group's seasonally adjusted index of refinancing applications decreased 7.5 percent to 1,356.0. A year earlier the index stood at 2,529.2.

No comments:

Post a comment