GB: CBI Distributive Trades

Wed Apr 29 05:00:00 CDT 2015

Consensus Actual Previous
Level 25 12 18

High street spending was unexpectedly soft according to the CBI's April Distributive Trades survey. At 12 percent the balance of respondents reporting higher volume sales than a year ago was down 6 percentage points versus its March outturn and comfortably short of market expectations as well as the CBI's own forecast made last month. The headline also hit a 3-month low.

Sales for the time of year (minus 1 percent after 1 percent) posted a smaller decline but orders (minus 8 percent after 10 percent) were particularly soft and saw their weakest level since May 2013.

However, with ONS recorded sales up a monthly 0.9 percent in April 2014, the slide in the CBI's annual measure need not necessarily equate with another decrease this month. Moreover, expectations for May were especially strong with the CBI forecasting their sales balance to recover to 40 percent which, if realised, would constitute its highest mark since December.

Still, following the surprisingly sharp 0.5 percent monthly reversal in actual sales in March, today's survey results warn that a decent rebound in April is unlikely. In practice the monthly correlation between the CBI's gauge and official sales is poor on a short-term basis but today's drop can only strengthen the case for no hike in Bank Rate in 2015.

This survey was first introduced in 1983 and is an indicator of short-term trends in the UK retail and wholesale distribution sector. The quarterly and monthly surveys both cover volume of sales, orders on suppliers, sales for the time of year and stocks, while the quarterly survey also covers imports, selling prices, numbers employed, investment and business situation. Both monthly and quarterly surveys now contain questions on current and expected internet sales and average prices for internet goods.

This survey is a leading indicator of consumer spending because retailer and wholesaler sales are directly influenced by consumer buying levels. The monthly update provides a vital update on volume of sales, orders and stocks. Like the industrial survey, it carries significant weight in the formulation of economic policy at the Bank of England and within government as a highly respected barometer of high street trade. It is considered to be an advance indicator of retail sales although it is not well correlated with the official data on a monthly basis.

Monthly and quarterly