GB: Retail Sales

Thu May 21 03:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.4% 1.2% -0.5% -0.7%
Year over Year 3.6% 4.7% 4.2% 4.0%

Retail sales rebounded surprisingly well in April. Following a steeper revised 0.7 percent monthly fall in March, overall purchases rose fully 1.2 percent, their best performance since November 2014. Compared with a year ago sales were up 4.7 percent, a 0.7 percentage point gain versus the quarter-end rate.

Excluding auto fuel the April results were identical and so also show a 1.2 percent increase versus March and a 4.7 percent annual rise.

April's recovery was wholly attributable to the non-food sector which, excluding auto fuel, recorded a hefty 2.4 percent monthly jump. Within this, warm weather probably contributed towards a 5.2 percent surge in clothing and footwear while the other stores category advanced a solid 2.4 percent. Smaller rises were seen in non-specialised stores (0.3 percent), household goods (0.5 percent) and non-store retailing (0.1 percent). Purchases of auto fuel were up 2.0 percent but food dipped 0.1 percent.

Inflation developments were again very soft and essentially unchanged from March. Thus, the overall sales deflator was 3.2 percent lower on the year, matching its quarter-end decline, while at 2.2 percent, the fall in ex-auto fuel prices was a tick steeper than last time.

Despite April's bounce, total sales in the last three months were up 0.7 percent versus the previous period, a 0.2 percentage point drop versus the March rate and the slowest pace since last October. However, this measure has now registered positive growth for twenty-six consecutive months, a series record. For non-auto purchases the rise was also 0.7 percent but this constituted a 0.4 percentage point increase from last time.

Overall the signs are that the consumer sector is still in good shape and, at least for now, instrumental to the UK's ongoing economic recovery. Rising real wage growth and the end of May's election uncertainty bode well for the rest of the quarter.

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.