What the 9/12 Retail Sales Report Means for Mutual Fund Investors

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Retail sales report


What the 9/12 Retail Sales Report Means for Mutual Fund Investors

Stoyan Bojinov Sep 12, 2014

The latest retail sales report was encouraging, as consumer spending increased during the month of August, while also prompting an upward revision of the last two data releases; the month-over-month growth rate also managed to meet analysts' expectations.

Inside the August 2014 Retail Report

Digging deeper, the overall sales figure received the biggest tailwind from the automotive sector, which saw sales growth of 1.5% in August, marking the biggest rise since March. Other sectors that saw growth were food, electronic, internet, and sporting goods retailers along with bars and restaurants.

The laggards in this month’s report were sales for general merchandise and department stores. Overall, retail sales have risen 5% in the past year; July sales were revised to 0.3% from being flat, and June sales were revised to 0.4% from 0.2%.

Mutual Funds on Watch: Consumer-Focused

In this current environment, consumer-focused stocks are regarded as a gauge for the overall pace of the recovery, as well as the health of the labor market; this is because the availability of jobs and wage levels play a key role in influencing consumer spending habits.

As such, today’s upbeat report serves as evidence that the recovery is indeed continuing to pick up steam.

The Bottom Line

Consumer staple stocks on the other hand are more defensive by nature, and less volatile, since they sell everyday household goods, which are more or less necessary for survival, regardless of the economic environment.

As a whole, consumer-focused mutual funds warrant a closer look from anyone looking diversify their portfolio’s equity component since this asset class can be utilized to generate current income as well as attractive capital gains at times.

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