E-Commerce sales jumped a strong 4.5% but before anyone gets too excited by the sales growth, E-Commerce represents only 8.1% of sales. Second, seasonal variations are in play.

E-commerce sales are sales of goods and services where an order is placed by the buyer or price and terms of sale are negotiated over the internet, an extranet, Electronic Data Interchange (EDI) network, or other online system. Payment may or may not be made online.

Bloomberg Econoday reports “The non-store component has been a leading strength of the monthly retail sales report, making the strong 4.5 percent quarter-to-quarter gain for second-quarter ecommerce sales no surprise. Year-on-year, ecommerce sales were up 15.8 percent in the quarter. As a percentage of total retail sales, ecommerce continues to move higher, up 2 tenths to 8.1 percent.”

Volatile Numbers

ecommerce 2016-08A

Economists do not estimate e-commerce sales.

Chart Legend

  • Red: Q1
  • Blue: Q2
  • White Q3
  • Yellow: Q4

I added colored lines to make it easier to see what’s really happening.

Two Perspectives

  1. E-commerce, only represents 8.1% of sales. A 4.5% gain on 8.1% is not that meaningful.
  2. This cyclically-volatile series does not appear to be seasonally adjusted.

For some reason, online sales tend to jump in the second quarter. The second quarter was the strongest quarter for four consecutive years.

This jump is just typical seasonal volatility. Many hate seasonal adjustments, but it is the only way to make sense of month-over-month or quarter-over-quarter variations.

Using unadjusted numbers, one can compare a month or quarter to the same period a year ago. The colored lines make it easy to spot.

Mike “Mish” Shedlock