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Part III. Fundamental Analysis / Chapter 14. Budget and Retail Indicators
Budget indicators include:
- Federal Budget;
- Treasury Budget.
The Federal Budget indicator characterizes the excess of government spending over revenues, so it would be more appropriate to refer to it as the "federal budget deficit" indicator. The balance of the federal budget has a direct impact on inflation, and therefore the exchange rate, which is why analysts often consider this indicator for long-term forecasting.
The paradox of this indicator is that when budget revenues and expenditures are equal, the economic situation in the country cannot be considered positive. The reason is that addressing the budget deficit issue leads to inflationary pressure. To regulate the balance, the government employs two methods:
- Increasing budget revenues through taxation.;
- Reducing expenditure items, particularly in social areas.
In the first case, taxpayers and businesses suffer, while in the second case, various social groups are affected. However, it is also not feasible to ignore the budget deficit issue without taking any action.
International interests in countries where the military sphere influences state policy can be significant. Reports on the federal budget are published monthly in the second half of the month at 22:00 Moscow time.
The Treasury Budget indicator represents the balance between government expenditures and revenues and is considered as a benchmark in the government securities market. The Treasury budget balance is examined for long-term forecasting, with particular attention given to it in April when tax revenues for the first quarter are accumulated. The indicator can have a substantial impact on the market, especially when projected and actual values significantly differ. Data on the Treasury budget balance are published on the third week of the month at 00:00 Moscow time, on a monthly basis for the previous month.
Retail trade indicators include:
- Retail Sales;
- Car Sales;
- Auto and Truck Sales;
- Redbook.
Retail Sales, as an indicator, reflects the strength of consumer demand by assessing the dynamics of changes in retail sales volume. There are two types of goods: durable and nondurable. Durable goods account for 40% of total retail sales, of which 60% is occupied by automobiles (passenger and commercial vehicles), and the remaining 40% consists of building materials, furniture, and household goods. Nondurable goods (lasting up to 3 years) account for 60% of the market share and include fast-moving consumer goods, fuel, food, and medicine. Data for the indicator are collected through a random survey of retail trade organizations across the country.
Due to the seasonality of automobile sales, the indicator is often analyzed by excluding data on car sales and focusing specifically on fuel and food categories, which are more dependent on price changes rather than changes in consumer demand.
The index is considered incomplete as it does not account for service sector activities, which constitute half of the overall consumption market. Therefore, retail sales data are revised based on consumption reports and personal income data, which are published two weeks later.
The dynamics of changes in the retail sales indicator coincide with the business cycle due to seasonal fluctuations. An increase in the indicator values indicates a strengthening economy and currency exchange rates. On average, retail sales tend to grow, although the data can fluctuate from month to month. Special months, such as September and December, may exhibit distinct patterns. Reports are published on the 13th of the month at 16:30 Moscow time.
Car Sales: This indicator reflects the number of car sales from all manufacturers during the month. Car sales are an important indicator of consumer demand, accounting for a quarter of total retail trade volume. The report is published during the first three business days of each month.
Auto and Truck Sales: This indicator characterizes retail sales of both trucks and passenger cars, with attention given to separate data for each category. Data is collected from all auto manufacturers within the country, and the value is considered a leading indicator with pronounced seasonal cyclicality. The pattern of this indicator often mirrors the pattern of the US dollar exchange rate, as car sales constitute 25% of the retail market. Reports on sales are published within the first three business days of the month at 16:30 Moscow time, on a monthly basis.
Redbook: This indicator provides a weekly overview of retail sales based on data from major stores. The indicator compares the sales volume for the current week with all previous weeks. For example, the second report compares sales to the first week, the third report compares sales to the two previous weeks, and so on. Therefore, a comprehensive assessment of the data can only be made in the last week of the month. The reviews are compiled based on reports from a limited number of supermarkets, which explains the weak impact of this indicator on the markets. Redbook reports are published every Tuesday at 17:00 Moscow time.