GB: Retail Sales

Thu Apr 23 03:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.4% -0.5% 0.7% 0.6%
Year over Year 5.7% 4.2% 5.7% 5.4%

Retail sales were surprisingly weak in March. Following a marginally smaller revised 0.6 percent monthly rise in February, volumes dropped 0.5 percent for their first decline since September 2014. Annual growth slowed from 5.4 percent to 4.2 percent, its weakest rate since December.

However, the disappointing headline print was essentially attributable to a slump in auto fuel sales which fell fully 6.2 percent versus February. Excluding this category purchases actually expanded 0.2 percent after a 0.6 percent increase last time.

In fact some areas enjoyed a particularly good period. Hence, household goods were up some 1.5 percent on the month while clothing and footwear climbed 0.9 percent and non-store retailing 0.6 percent. Still, specialised stores posted a 0.4 percent decline and the other stores category a hefty 1.9 percent reversal. Food sales were up 0.4 percent.

Retail sales tend to be highly erratic on a monthly basis but it is probably of no coincidence that their drop in March coincided with a 0.7 percent monthly increase in the retail sales deflator, its steepest increase since February 2014. Excluding auto fuel prices were up only 0.2 percent, down from a 0.7 percent gain last time and likely one factor behind the relative buoyancy of non-auto fuel demand. Consumers may be spending again but they remain highly sensitive to changes in prices.

Despite the March setback, the latest figures leave overall retail sales volumes up a healthy 0.9 percent over the first quarter. Excluding auto fuel the rise is a more modest 0.5 percent. By and large the household sector still looks to be in pretty good shape and a vital plank supporting the ongoing UK economic recovery. However, the retail market would seem to be as competitive as ever and as good a reason as any other for supposing that Bank Rate will not be hiked in 2015.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data include all internet business whose primary function is retailing and also cover internet sales by other British retailers, such as online sales by supermarkets, department stores and catalogue companies. Headline UK retail sales are reported in volume, not cash, terms but are available in both forms.

With consumer spending a large part of the economy, market players continually monitor spending patterns. The monthly retail sales report contains sales data in both pounds sterling and volume. UK retail sales data exclude auto sales.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.